HYBE album sales inflated: Court documents reveal widespread "Push-out" practices in subsidiary labels

The trial for “Min Hee Jin v. HYBE,” concerning the termination of a shareholder agreement and a put-option claim, was held on the 12th, resulting in a victory for Min Hee Jin. Documents believed to be part of the court’s judgment have been made public.

Among these, the practice known as “album push-out,” essentially inflating reported sales numbers, was discussed. Min Hee Jin had repeatedly highlighted this issue in public as a problem at HYBE. While the company publicly denied such practices, internal measures were reportedly implemented, effectively acknowledging that push-outs had occurred.

The court documents summarize: “In 2023, two albums were sold with 70,000 copies each, totaling 140,000, under conditions allowing returns. Following Min’s request, HYBE conducted an internal investigation, identified the issue, strengthened internal controls, and established company regulations to prevent recurrence.”

Statements from HYBE’s subsidiary ADOR also detail the matter:

- “G (NewJeans) was once recommended by D to release albums in a push-out manner.”

- “When CJ released an album, D advised G (NewJeans) to push 100,000 copies to surpass BQ’s initial sales record, but F (Ador) firmly refused, as it conflicted with the company’s business philosophy.”

- “While we recognize this practice has spread within D (HYBE) labels, we request strict investigation into any past transactions with subsidiaries under return conditions, ensure transparency, and handle any push-out transactions properly,” according to Ador’s statement dated April 16, 2024.

The court notes indications of push-out practices within HYBE:

- Defendant HYBE CEO V appeared to recommend pushing NewJeans albums.

- On August 4, 2023, the head of HYBE Japan’s strategic planning team also used the term “volume push-out.”

- Following Min Hee Jin’s claims, HYBE confirmed through an internal audit that two records in 2023 were sold in returnable structures totaling 140,000 copies. Measures were subsequently taken to prevent such sales in the future.

Internal documents referenced in a National Audit on October 24, 2024, show HYBE Japan sold initial inventory under returnable conditions, including additional 100,000 copies after June concerts. Ador’s COO B reportedly confirmed similar facts during the audit, aligned with HYBE CEO V’s April 22, 2024 email.

KakaoTalk messages between B (Ador executive) and Min suggest the conversation on push-outs: “(Did HYBE Japan push inventory on you?) No, but V mentioned before that inventory could be pushed in Japan. (We didn’t do anything, right?) Correct, we refused. V brought it up first. (Why did he bring it up?)”

The court acknowledged the reliability of these conversations, noting that V testified the discussion occurred as described.

Regarding Min’s revelation of push-out practices, the court concluded, “Inflating initial quantities to promote chart rankings undermines fair distribution and is subject to criticism.”