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While other record labels around the world have found growth through streaming during the coronavirus pandemic, Big Hit Entertainment, home to superstar group BTS, has continued to thrive the old-fashioned way: by selling albums and merchandise.

The South Korean music company — which profits off recorded music, touring and merchandising and licensing — navigated the 2020 concert shutdown and improved revenue 36% to $716.7 million for the year, Big Hit announced Tuesday (Feb. 23) in its annual earnings report. Albums were Big Hit’s big moneymaker last year, accounting for 40.2% of all income. Overall operating profit climbed 44% to $128.2 million and net profit rose 19% to $77.5 million.

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A new BTS album, Map of the Soul: 7, and four mini album releases by the group Seventeen from Big Hit’s investment in K-pop label Pledis in May, helped Big Hit sell 13.2 million albums. That’s up 54% from 2019, with $288.5 million of revenue — a 196% improvement. Eight tracks from Map of the Soul: 7, released last February, spent time on the Billboard Global 200 Chart in 2020, with BTS’ later singles “Dynamite” and “Life Goes On” both reaching No. 1. In the U.S., Map of the Soul: 7 sold 674,000 units in 2020 while its tracks were streamed 715 million times, according to MRC Data.

Normally, Big Hit’s holistic business model is well suited to the modern music business. But the pandemic killed touring, traditionally Big Hit’s largest revenue stream, and favored record companies that can sell albums to die-hard fans. Big Hit, which the stock market valued at $7.33 billion on Tuesday, could have grossed $180 million from 60 world tour shows cancelled in 2020, according to Big Hit chairman and CEO Bang Si-hyuk, but saw its concert revenue decline 98% from $172 million to $3.1 million. Last year, BTS earned $116.6 million from its 20-show Love Yourself: Speak Yourself stadium tour in 2020 — behind only the The Rolling Stones, Taylor Swift and the Spice Girls on a per-show basis.

The latest earnings illustrate how Big Hit depends on physical album sales at a time when streaming is the dominant format globally and in South Korea, where Spotify launched on February 1. But outside of album-leaning genres like heavy metal, albums are not the dominant revenue source they once were. Big Hit also continues to rely on one act — BTS — for most of its revenue, though the company is making moves to diversify its artist roster.

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Last week Big Hit and Universal Music Group announced a joint venture to create a K-pop-focused label with Geffen Records, and a music competition show on U.S. television to discover a new K-pop boy band. Si-hyuk called the partnership with the world’s largest music company “an acknowledgement of the capability of the full-production system” of production, fan communication and the ability to launch new artists.

Its 360-degree business model allowed Big Hit to quickly pivot to ameliorate the pandemic’s effects by moving from the real world to a virtual one. Online concerts, namely a New Year’s Eve live show, drove content revenue up 71% to $120.1 million. Merchandise sales shifted from concert venues to online platform WeVerse, rising 53% to $233.1 million. Big Hit launched WeVerse, a mix of social media and e-commerce, in June 2020; it now processes over $90 million in payments each quarter, according to Si-hyuk.

While BTS is undoubtedly a global phenomenon, Big Hit received 46.4% of its 2020 revenues from South Korea — Si-hyuk says Big Hit accounted for 33% of all album sales in South Korea in 2020 — and 30.4% from other Asian countries, both increases from 2019. Without concerts in 2020, North America’s share of Big Hit’s income dropped from 33.2% to 21.8%, despite strong album sales and track streams in the U.S. When the pandemic subsides and concerts return, those numbers are almost certain to reverse, with overall revenue bound to grow.

Additional reporting by Jeyup Kwaak. 

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