SEOUL -- Hybe, the agency of K-pop wonder BTS, diversified its business portfolio into non-fungible tokens through a joint venture with Dunamu, a blockchain company that operates South Korea's major cryptocurrency exchange Upbit, to turn the intellectual property of artists into digital assets that can be displayed and exchanged in fan communities. Hybe will issue new shares to secure some 700 billion won ($593 million) for its investment in Dunamu.
A non-fungible token (NFT) is a unit of data stored on a blockchain network of interlinked virtual ledgers. Each NFT is certified by a blockchain as a unique digital asset. NFTs can be bought and sold digitally. As digital music streaming has become common, music can be shared by an unspecified number of people. NFTs allow a specific person to own original digital content that cannot be duplicated and record ownership information.
In a regulatory filing on November 4, Hybe controlled by BTS creator Bang Si-hyuk said it would acquire a 2.48 percent stake worth about 500 billion won in Dunamu to establish "long-term partnerships and jointly promote new businesses including NFT." The two companies would set up an NFT-related joint venture.
Major entertainment companies in South Korea are paying attention to new technologies such as metaverse and NFTs that could utilize the growing worldwide influence of K-pop artists and their intellectual property to create new and stable sources of income. In July, JYP Entertainment joined hands with Dunamu to launch an NFT platform business.
NH Investment & Securities analyst Lee Hwa-jung said earlier that Hybe's new businesses are expected to achieve success by turning its fandom platform into metaverse and utilizing the intellectual property of artists as NFT.
The joint venture with Dunamu will become a tool to help Hybe expand its content to webtoons, web novels, and games based on the power of "story," Bang said, citing NFT as an example of digital photo cards which contain production stories and artists' daily lives through photos, short videos and music. Fans can exchange and display certified photo cards through fan communities and keep them permanently as digital assets.
"We are meeting all fans without boundaries of content such as commerce, games, original content, publishing and education beyond music and artists," Bang said.
Dunamu Chairman Song Chi-hyung said that digital photo cards can provide "synesthesia communication methods" as fans will be able to exchange cards through global communities. "We will focus on developing high-quality services so that our fintech technology and Hybe can meet to provide fans around the world with an expanded experience of value sharing and exchange."
Hybe has stepped up efforts to expand its business scope in the U.S. music market. In April, its American subsidiary acquired Ithaca Holdings, a Los Angeles-based investment holding company that controls the label of Justin Bieber. The acquisition that cost some $950 million came two weeks after Big Hit Entertainment founded by Bang Si-hyuk changed its name to Hybe to herald a new start.
Bang has pushed for aggressive structural changes to introduce a multi-label system. The music label survives under the name of "Big Hit Music" while the platform division is based on Weverse, a fan community service that allows fans to interact with artists and makes profits through subscription models and streaming. The solution division consists of subsidiaries that create secondary and tertiary businesses specialized in performance, video content, intellectual property and games.
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