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Bieber and BTS label HYBE invests in AI

09 Apr 2021 | by: Kirsteen Mackay

Big Hit Entertainment (KRX: 352820) is a South Korean music label, representing the world’s biggest boy band BTS. Big Hit Entertainment (HYBE) went public in October last year, with an initial public offering in South Korea, making its founder Bang Si-hyuk a K-pop billionaire. Since IPO, its share price has risen 28%.

Big Hit Entertainment becomes HYBE
Photographer: Sašo Tušar | Source: Unsplash

Name change and A-list merger

Following this, the company bought Ithaca, the Management business that runs Justin Bieber, Demi Lovato and Ariana Grande. It’s also changed its name from Big Hit Entertainment to the more concise HYBE.

Although HYBE is the new company name, the record label will continue to be called Big Hit Music to maintain its identity.

With its $1 billion purchase of Scooter Braun’s Ithaca now in the bag, HYBE is set to become a serious global player. In fact, this collaboration creates a fanbase of over 220 million via the artists’ extensive YouTube and social media following.

It’s also helping HYBE move away from its heavy dependence on BTS. 97% of its 2019 revenues were accredited to K-pop stars BTS. Further, it gives the company the opportunity to diversify its musical-genres from simply K-pop into hip-hop, Latin, pop, and country.

BTS are a lucrative South Korean K-pop act

Deal upon deal

Since going public HYBE has signed several lucrative deals. These include Universal Music Group and South Korean portal operator Naver, aka the Google of South Korea. It also joined forces with competitor YG Entertainment (KOSDAQ: 122870), which manages K-pop star BLACKPINK. This strategic global fandom business collaboration gives it access to millions more YouTube subscribers and fans.

HYBE acquisitions growth
Big Hit Entertainment HYBE expands its reach – Photographer: Matt Botsford | Source: Unsplash

HYBE focuses on growth

Its newly branded company has three areas of focus; Labels, Solutions, and Platform.

Labels include Big Hit Music, KOZ ENTERTAINMENT, Source Music, BELIFT LAB, PLEDIS Entertainment, and HYBE Labels Japan.

Solution is focusing on video content, IP, learning and games, and spin-off businesses.

Finally, Platform includes HYBE’s successful Weverse company, which connects and expands the company’s contents, services and merchandise sales system.

The Weverse merchandising platform sells all sorts of artist merchandise, tickets, and videos. It represents 19 musicians to date and has a growing fanbase.

There’s no doubt HYBE has big ambitions and hopes to become the “world’s leading entertainment lifestyle platform company based on music.”

Investing in AI

The Korean record label is heavily investing in artificial intelligence (AI). Ultimately, this is to get more artistic bang for its buck. By utilising the power of AI, the company can monetise its artists exponentially in a way that’s set to revolutionise the entertainment industry.

embracing artificial intelligence
HYBE is embracing AI – Photographer: Barbara Zandoval | Source: Unsplash

When pop art King Andy Warhol was alive, he transformed the way the art world authenticated art. That’s because Warhol was on a mission to paint like a machine which led him to allow his assistants to help with production. There came a point he was signing pieces that his assistants had produced. And this transitioned into the assistants stamping the artwork with his signature in his absence.

In a similar vein, HYBE has plans to use its artists to generate cash, without them ever needing to be present. Imagine the potential, if it can train AI to know the artists’ voices for future use in video games, audiobooks, podcasts, dubbing adverts or animations. Cartoons are a big part of K-pop culture and could be expanded to its artists in other genres.

That’s the power inherent in AI and it’s got the capacity to become a money-printing machine.

Profiting from artificial voice

In February HYBE bought Supertone, a South Korean Artificial Intelligence company for $3.6 million. It’s a relatively new company, founded less than a year ago, but it claims it can create “a hyper-realistic and expressive voice that [is not] distinguishable from real humans”.

This is a controversial area to be stepping into, but it has the potential to be an industry game changer. With Supertone’s technological expertise, soon HYBE could be recording its artists vocals and reusing them at its pleasure. In the case of BTS, this would also solve the problem of the band growing up and leaving to pursue other interests, as we discussed in a previous Value the Markets article.

profiting from AI
Profiting from AI – Photographer: Sharon McCutcheon | Source: Unsplash

And, it’s not as futuristically impossible as it may seem. Supertone recently shocked Korea when it resurrected the voice of a deceased folk superstar Kim Kwang-Seok. It did this using its Singing Voice Synthesis technology and showcased it on a TV show called Competition of the Century: AI vs Human.

Supertone’s COO told CNN that the technology was trained by first learning 100 songs from 20 singers. Once it had refined its technique, it learned ten specific Kim Kwang-Seok songs. Thus, training it to mimic the artist’s voice in a clone like fashion.

However, it does lead into a grey area of ethics particularly if an artist dies. Meanwhile, the rise of deepfakes is blurring the lines and remains a cause for concern.

Onwards and upwards

The company already has an Artist Indirect-Involvement policy which helped it continue to thrive during the pandemic when much of the entertainment industry was brought to its knees.

During 2020 HYBE’s revenues grew 36% year-on-year. With its new acquisitions and big ambitions, there is hope this growth trajectory will continue.

Combining the capability to scale, the top talent on its books and the extensive fanbase reach, HYBE looks to be moving at an exhilarating pace.

Artificial Intelligence and authentic voice are all the rage, consider the rise of Clubhouse and Twitter spaces. Giving reason to believe this has room for serious growth. Content creation for living artists could be a commercial gamechanger. It could also mean share price excitement for committed investors.

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  • Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.
  • Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.
  • Other ValueTheMarkets.com contributor(s), who have not contributed to this piece, do (does) not hold(s) a position or positions in the stock(s) and/or financial instrument(s) mentioned in the piece.

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