SM Will Stop Producing CDs???

So… since I don’t go to Allkpop, I am so late about the subject, hahahaha… but I dug around and read the interview of Kim Young Min…

The quote that got a lot of people talking is this:

We will only be distributing digital music, and not physical CD’s. There will be more opportunities for business after launching our musical library

Now, if you take this quote on its own, it does seem like SM is performing one of the stupidest move of the century… let’s face it, SM artists are friggin strong in physical album sales, not so much in the digital front… in both Korea and Japan…

But he’s not exactly talking about Korea or Japan, is he?

If we read the actual article, it says:

MK recently held an interview with representative Kim Young Min from SM Entertainment who said, “I guess you can say that we have constructed the market conditions so that now, we can create a music format to break into the Asian market. Our goal this year is to launch into the Asian market, collaborating with corporations in China and Japan. We are keeping all of our options open, and reviewing them over carefully.”

SM Entertainment is looking to grow their profits through the distribution of music. “We will only be distributing digital music, and not physical CD’s. There will be more opportunities for business after launching our musical library.”

And then it continues

“The image of the SM Entertainment brand has grown to a point where we are acknowledged enough to release a rookie group in China,” Kim continued. The Chinese market has a high profitability rate for things like advertisement and management. If advertising rates in Japan are $100, it would be $120 or $130 in Korea, while China would be the highest at around $200. With China allowing more free streaming and downloads, profits from digital music is increasingly growing.

I honestly think he’s talking about foreign market (outside Korea and Japan, especially China).

By distributing their music digitally in China (and other parts of the world), they don’t have to spend money on production or shipment and they can maximize their earnings (and fangirls can’t excuse their illegal downloading on expensive products anymore)… 

I do hope SM continues to produce CDs, because they’re pretty… and I like having an actual copy of TVXQ CD to spazz on. However, it is a widely known fact that the entertainment industry actually make little profit on CDs… Endorsements, Merchandise and Live Performances is where the money at.