Controversy Over Unregistered Solo Agencies: Protection Systems Turning Into Restrictions

Solo agencies run by celebrities such as Cha Eunwoo, Seong Si-kyung, and Lee Hae-nui have become embroiled in disputes regarding tax audits and unregistered status. Critics argue that the systems and taxation standards designed to support changes in the industry structure are outdated.

The registration system for popular culture and arts planning businesses, introduced in 2014, was intended to protect celebrities. The underlying motivation came from the abuses by agencies exposed by the Jang Ja-yeon case, including unfair contracts, unpaid earnings, and human rights violations. Operating an entertainment planning business without registration carries a penalty of up to two years in prison or a fine of up to 20 million won, while failing to meet registration requirements results in a fine.

However, more than a decade later, the landscape of the industry has changed significantly. Controversy arose after it was revealed that solo or family-owned agencies founded by well-known celebrities such as Ok Ju-hyun, Seong Si-kyung, and Lee Hae-nui were operating without registration. Some of these celebrities were referred to prosecutors, while others were not.

The shift in the industry structure is driven by the globalization of K-pop and K-dramas. In the past, the typical pattern was a strong agency with weak celebrities, but recently, successful actors and singers are increasingly establishing their own companies to handle production, investment, and intellectual property management. The Korean Management Association explained that “due to the global Hallyu wave, individuals have become corporate entities capable of generating enormous profits” and that “artists are starting to set up personalized corporations to manage their careers, IP, and long-term brand value on their own.”

The fact that systems meant for protection are functioning as regulatory tools demonstrates that these systems cannot keep up with industry changes. It remains unclear whether a solo agency established for tax management, revenue settlement, or participation in production qualifies as an entertainment planning business, with judgments often varying depending on the actual nature of its operations.