'Saying you want to break into America is already wrong': K-pop veteran Kim Jae-joong on surviving as an indie label

"Do you know who I am?"

Kim Jae-joong is a founding member of second-generation K-pop group TVXQ, who debuted in 2003 and helped pioneer the Japanese market — effectively expanding K-pop's reach across East Asia. But when he took the stage Wednesday at MUCON 2026, held at Cube Convention Center in Mapo-gu, Seoul, he set aside his long list of credits as a singer and actor and introduced himself simply as the founder and chief strategy officer of Encode Entertainment, a small independent label he established in 2023.

In his keynote address, Kim laid out the structural contradictions he sees in the K-pop industry and made the case for why independent labels need their own survival strategies and infrastructure — not borrowed ones.

"Saying you want to break into America is already wrong."

The star who experienced K-pop's global expansion firsthand has reinvented himself as a producer of rookie groups, now focused on the industry's long-term sustainability and charting new paths forward.

"If you blindly copy what the big companies do, you will only ever produce a degraded version."

Speaking on the theme of global expansion strategies for small and medium-sized K-pop labels, Kim offered a new formula for going overseas. His central warning was against mimicking the methods of major agencies. "The most dangerous thinking a small label can have when going abroad is: 'Let's try to do what the big agencies do, but with a smaller budget,'" he said.

The K-pop industry became capital-intensive early on, and it has always been the major players who led its expansion — armed with capital, personnel, global distribution networks, platform negotiating power and local connections. Kim argues that small labels start at a disadvantage the moment they try to compete on those same terms. He also pushes back on the framing itself, saying the dynamic should not be described as "big companies versus small companies" but rather "major agencies versus independent producers."

Kim identifies agility as the independent label's greatest weapon. "Responding quickly to audience and fandom reactions, and pivoting the concept fast when something isn't working — that ability to shift gears is our survival instinct," he said.

The global strategy Kim has developed turns the conventional K-pop formula on its head. The traditional model is well established: build an artist domestically, grow a domestic fandom, confirm commercial viability, then expand to overseas markets such as Japan, the United States and Southeast Asia.

Kim proposes a different starting point. "You have to first decide which market you are targeting and whose love you want to earn, then design why those fans would choose this artist — and only then build the members, the music, the visuals, the character, the content, the platform, the local partners and the revenue model," he said. The goal, in his words, is not to take a domestically popular singer global, but to design for a global audience from the outset.

His approach to targeting overseas markets breaks the world down into the smallest possible units. "For a small company, the country level is too large a unit to take on the whole world," he said. "We need to find the markets we can win, understand the fans there, and create reasons for them to choose us." That means analyzing individual cities and their specific conditions before thinking about countries.

"Just because a city in the US has 5,000 fans doesn't mean you have to go there first. Another city might only have 1,500 fans, but if there's less competition, the fans have higher purchasing power, and the venue conditions, logistics costs and airfare are all lower — that city could actually be the better market."

He also cautions against being deceived by what he calls the illusion of online buzz. Strong social media engagement in a market does not automatically make it a good market, he said. Airfare, shipping costs, exchange rates, local purchasing power, ticket prices and performance infrastructure all have to be factored in together — "because the market where you are well known and the market where you can build a viable business are not the same thing." This is the starting point for what Kim calls "global digging" — a strategy of granular, deep-dive market research. The goal is not "going to America" but finding the first city in America where you can actually win.

The two rookie groups Encode has produced were built on exactly this logic. KEYVITUP, a five-member boy group that debuted in April, is aimed at the Americas market, while VAYONN, a six-member multinational boy group that debuted in July, is calibrated for Asia.

The two groups differ in more than geography — their entire monetization structures are designed differently. "The Americas and Asia are completely different games," Kim said. In the Americas, an artist's individuality and the ability to attract new fans matter most, with streaming, brand collaborations and touring carrying the most weight. In Asia, by contrast, "maintaining long-term relationships with fans and creating repeated points of contact" is what counts, he said. Album sales, merchandise and fan meetings are also key drivers of fandom-based consumption.

Even Asia cannot be treated as a single market. Japan is defined by long-term fan relationships and high per-fan spending. The Chinese-speaking market requires navigating local platforms, content distribution channels and regulatory conditions. Southeast Asia has a young population, strong social media reach and high K-pop affinity, but purchasing power varies significantly from country to country. "The word 'global' is too broad a term to cover markets this different from one another" — and that, Kim said, is precisely why each requires its own strategy.

At the same time, Kim said the point of running two groups under different hypotheses is not to prove those hypotheses right. "The core capability of a small label is the ability to pivot quickly when the data tells you you're wrong," he said.

K-pop is, without question, a fandom industry. Fans were also the centerpiece of Kim's keynote — though he does not see them as consumers in the conventional sense.

"Fans are consumers, but they are also media. They are marketers, and they are a community," he said. In his view, fans who absorb music and a brand and then repackage it in their own way to share with others can be far more powerful than any paid viral marketing campaign a company runs.

"The ripple effect of people who listen to our music and engage with our brand, then make it look even cooler and more beautiful and spread our existence to markets and people who have never heard of us — that is more effective," he said. "What matters is how much activity is happening between fans and other fans."

It works like this: a person hears well-crafted music, responds to it, and begins to identify as a "fan" — at which point their behavior changes. They actively share the artist they love with others and spontaneously create new content. That leads to purchases, then repeat purchases. Kim mapped this flow as: attention → reaction → fan identity → content creation → purchase → repeat purchase → long-term fan lifetime value, or LTV.

In this framework, LTV does not simply measure how many albums a single person buys. It encompasses how long that fan stays, how often they spend, and how many new fans they bring in. The industry, Kim argued, needs to move beyond measuring fandom size alone and start asking what kinds of behavior are actually happening within a fandom.

The overseas expansion model Kim has built for Encode — now in its fourth year — unfolds in three stages: a digital testing and discovery phase spanning the first three months, a small-scale offline validation phase from months four through six, and a partnership and expansion phase from month seven onward.

The process begins by producing and distributing short-form content and collaborating with local creators to identify which cities and countries generate real responses. From there, the label stages showcases of 300 to 1,000 people in two or three cities. Finally, capital is concentrated on the cities, countries and platforms that have been validated, and actionable partnerships are built. "That last stage is when the company truly has to go all in," Kim said. The key principle throughout: do not commit large sums of money from the start.

"The advantage small companies have over large ones is that a lean organization allows for very fast decision-making," he said. "Knowing when to put money in and when to stop is what matters." The goal is to learn the market as quickly as possible with limited resources, then concentrate capital where potential has been confirmed.

He added that "the most dangerous thing for a small company is not failure itself, but continuing to burn through capital without realizing you are already failing."

The insight Kim has drawn from hard experience is that what independent labels need most is the right to fail. He called not for simple expansion of government grants but for what he described as a "data alliance" — because labels today operate in isolation, like islands cut off from one another.

"Company A goes through a failure, and Company B goes through the exact same failure. We need to start sharing those experiences with each other," he said. "We can only survive by pooling data — reliable lists of overseas agencies, customs regulations by country, marketing efficiency figures — into a shared cloud-like infrastructure." The vision is an information network that lets the entire Korean content industry learn faster, turning failure data into an asset for the industry as a whole.

His view of the government's role is equally unconventional. "The government's job is not to manufacture success — it is to make it cheap to fail and fast to try again," he said. Directing large subsidies only toward companies that have already succeeded will not grow the industry as a whole, he argued. Recording why failures happen and preventing the next company from repeating them would, over time, build far more durable infrastructure.

Now in its 15th year, MUCON is a global music market that supports Korean musicians and entertainment companies in expanding overseas and connects industry professionals from around the world. This year's edition, which features Kim as its keynote speaker alongside conferences with domestic and international producers, business-matching sessions and showcase performances, runs over three days.