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Music & Entertainment

DearU: A K-pop fan engagement platform success story

The startup plans to expand the artist-fan chat service bubble to the metaverse with proceeds from its IPO

By Oct 18, 2021 (Gmt+09:00)

DearU bubble, a K-pop fan engagement platform
DearU bubble, a K-pop fan engagement platform

No company would know better than DearU Inc. that powerful fandom can turn into fast money.

The South Korean startup that started as a software development company slightly more than four years ago believed that, as K-pop’s popularity grew across the globe, many fans would love to have a private, personal chat with their favorite artist, to make them feel special.

Thus the company launched DearU bubble, a private messaging service that connects fans to K-pop artists, in February 2020.

With a monthly subscription fee of just 4,500 won ($3.8), users can exchange messages with their beloved artists anytime, just as they share mundane, everyday things with their close friends through chat services such as KakaoTalk.

DearU founder and Vice President Lee Hak-hee
DearU founder and Vice President Lee Hak-hee

“In the beginning, the user response wasn’t very positive. Some people said we were making money by abusing fans’ love for K-pop artists. But in no time, the service established itself as a good communication channel between artists and their fans and a successful business model,” said Lee Hak-hee, vice president and DearU founder who developed bubble, the company's private chat service.

In about a year since its launch, DearU's bubble now boasts more than 1.2 million in subscriptions, with monthly revenue of 5.4 billion won. When calculating subscriptions, any single fan can follow or subscribe to multiple numbers of artists.

What’s striking about the service in business terms is that the company hardly spends any money promoting the bubble service.

“Unlike the usual social networking services, where artists often get malicious comments or suffer from cyberbullying, they receive warm-hearted, friendly comments from their fans on bubble. They like to talk spontaneously. The stars are like a walking advertisement for bubble. We don’t need any other marketing,” Lee said.

DearU bubble
DearU bubble

FIGHT AGAINST WEVERSE

Established in July 2017, DearU, formerly called Everysing, which was founded by SM Entertainment Co., merged with Brinicle Inc. in 2019 and later in the year launched Lysn, an SM Entertainment fan club community. Last year, it expanded Lysn to launch DearU bubble as a subscription-based fan communication platform.

DearU has attracted investment from JYP Entertainment Inc. as well as SM Entertainment as the two Korean music labels were striving to compete against fan platform market leader Weverse, operated by the BTS agency HYBE Co.

Currently, SM Studios, SM Entertainment’s content subsidiary, is DearU’s largest shareholder with a 40.17% stake, while JYP Entertainment holds 23.27%.

DearU has been gaining a stable stream of revenue from its bubble service by making use of the subscription economy alongside enhanced fan loyalty.

Bubble currently provides messaging services with K-pop artists mainly from its two key investors – JYP Entertainment’s TWICE and ITZY – as well as SM Entertainment’s Red Velvet, EXO, NCT, Super Junior and rookie girl group Aespa. The company has also expanded the service's lineup of artists by inviting K-pop boy bands such as SF9, CNBLUE and N.Flying of FNC Entertainment Co.

With 61 employees on its payroll, DearU posted an operating profit of 6.6 billion won on revenue of 18.4 billion won in the first half. The company’s operating profit margin was 36%.

JYP Entertainment's TWICE
JYP Entertainment's TWICE

TO EXPAND TO METAVERSE WITH IPO PROCEEDS

DearU is seeking an initial public offering in November with its corporate value estimated as high as 530 billion won, about half that of major entertainment companies’ market capitalizations.

It aims to sell 3.3 million shares between 18,000 won and 24,000 won apiece to raise up to 79.2 billion won ($66.9 million) in the tech-heavy Kosdaq market. Its market capitalization can go up to 528 billion won based on the indicative price range.

The company plans to use the proceeds to secure intellectual property (IP) rights for global artists and develop new business models.

The company aims to expand its digital services from the global fan messenger platform to a metaverse platform to eventually build a comprehensive entertainment platform.

Write to Ye-Jin Jun at ace@hankyung.com

In-Soo Nam edited this article.

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