ADOR, a label under HYBE, won the first trial in its lawsuit to confirm the validity of its exclusive contract with the group NewJeans. With the ruling that the contract remains in effect, NewJeans is restricted from independent activities without ADOR's consent.
But as the dispute dragged on, both sides failed to avoid losses. ADOR saw its revenue shrink from new ads and performances, and NewJeans also hit a brake in expanding its brand value.
The Civil Agreement Division 41 of the Seoul Central District Court (Presiding Judge Jeong Hoe-il, Director General) on the 30th ruled in favor of ADOR in the lawsuit it filed against the five NewJeans members, saying "the exclusive contract is valid." The NewJeans members declared the termination of the exclusive contract, saying demands such as the return of former ADOR CEO Min Hee-jin, HYBE stopping actions that belittle NewJeans' achievements, and taking necessary measures were not fulfilled, but the court did not accept it.
NewJeans received an explosive response at home and abroad right after its 2022 debut. It set a new first-week sales record for a girl group debut album by surpassing 310,000 copies sold, and with its debut song "Attention" it became the first K-pop group debut track to enter Spotify's U.S. weekly popular chart. Two months after debut, the official YouTube subscriber count surpassed 1 million. In Nov. the following year, its combined cumulative streams on Spotify exceeded 3 billion. It swept modifiers like "first" and "best."
However, as the dispute with ADOR created limits on activities, both sides took a heavy hit. ADOR, which posted 110.3 billion won in revenue last year, stayed at 17.2 billion won in the first half of this year. Compared with the first half of last year (61.4 billion won), that was a 72% drop.
Although it booked revenue from ad contracts concluded before the dispute erupted, the second half of this year also has virtually no new ad or performance contracts, making it highly likely the company will fail to match last year's results. NewJeans is the only artist under ADOR.
A red light also turned on for NewJeans. NewJeans is currently on hiatus under the court's finding that "activities cannot be conducted without ADOR's consent." Industry watchers say the longer the hiatus, the more ad and brand value will fall, and competitiveness in the music market will inevitably be lost. As K-pop consumer trends turn over quickly, it could also become harder to maintain competitiveness.
In fact, the group Fifty Fifty drew major attention on the U.S. Billboard charts, but its activities were suspended as it became embroiled in legal disputes over breaches of the exclusive contract. Its fandom then rapidly left and plans fell through, preventing it from maintaining momentum. If the dispute is prolonged, NewJeans could be remembered as a similar case to Fifty Fifty.
It is unclear whether the two sides will settle their conflict following the court's decision. If NewJeans appeals, the trial will move to the second instance. The longer the conflict lasts, the longer NewJeans' hiatus will be.
A legal source said, "As a matter of law, it was a lawsuit that NewJeans was unlikely to win, and since a prolonged trial would greatly harm the young NewJeans members, the court held two settlement dates to propose an amicable agreement," and added, "I understand that settlement was not reached because the NewJeans side took a firm stance, citing reasons such as a 'breakdown of trust.'"
The entertainment industry believes the two sides need to resolve the conflict quickly to help maintain K-pop's competitiveness. ADOR is struggling to expand revenue as it has not secured alternative revenue sources beyond NewJeans, and NewJeans' standing as a "Gen Z icon" that led trends could also be shaken.
An industry official noted, "It could lead to a decline in brand value and a drop in market credibility, making recovery harder over time," and added, "Since the damage returns to both the artists and the company, a realistic middle ground must be found."