With the court agreeing on the injunction sent by the 3 members of TVXQ, the trio had the power to look at SM Entertainment's contract for the members. It was shockingly unfair and against public policy. The three members who stood up for themselves (Kim Junsu, Kim Jaejoong, and Park Yoochun) have the court on their side and are now proceeding with their main lawsuit, which is to get the shares and income that they deserve from their activities in the past 6 years.
Below is what the court has presented as the content of the members' contracts. The contract has been modified 5 times since their debut, so this is the overall review.
1. TVXQ has received $0 from their album sales till July 2008, and a very small amount after.
Before the fifth modification that the company made with their contract, it stated that the profit from albums and singles with sales less than 500,000 copies would go 100% to SM Entertainment, which left the members with nothing. There has been no Korean album that have exceeded 500,000 album sales between the time of TVXQ's debut and their 4th album Mirotic, which was the first album in Korea to sell over 500,000 albums for a long time.
On July 1 2008, the company changed the contract so each member would get 1% from album sales that exceeded 200,000 copies. For albums that are below that number, they are paid 0.6% to nothing. Through these terms, TVXQ has not earned a single cent since February 2009.
2. TVXQ has received $0 from sales of concert DVD's and albums with recordings from concerts.
The contract stated that the members are not entitled to get any profit from concert DVD's and "live" albums.
3. TVXQ received $0 from their appearances in TV programs.
In the contract, the members do not have a right to receive the shares made from appearances on television programs if they are featured in only one episode or if their appearance is temporary. SM has kept all the profit from TV shows where TVXQ were guests.
4. For other ways of getting profit, SM subtracts the total amount with all the expenses that the company has paid for them, including clothing, salary of company staff, stage preparation, rent, food expenses, and etc., which only leaves a fraction for the members of TVXQ.
As for all other sources of income, the contract says that the members do not get the full "net income", but only get a percentage of it. The contract states that the "net income" is the profit remaining after deducting their operating costs, which is the money that the company spends on them. The operating costs include expenses that are to be covered by the employer, such as salaries of the staff (manager, clothing coordinators, makeup artists, dance coordinators, back dancers, etc.), performance stages, living expenses which include water and electricity bills, travel expenses which include plane tickets, and meal expenses. The company might add something in addition to deduct more from the net income.
In conclusion, TVXQ actually received anywhere from 1% to 5% from all of their activities, which depending on how you look at it can still add up to 7 figures or more but still many consider this to be unfair.
Thanks to DBSKnights, AiNoSaranghae, allkpop [DNBN], Inklette@DNBN.pe.kr, and tohosomnia.net for sharing the information. and also check out the ONETVXQ Forums
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