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Girl group Wonder Girls performs at the 27th Cyworld Digital Music Awards held at Lotte World in Seoul’s Jamsil neighborhood in October of 2007. (Yonhap)

K-pop idol groups who were active from 1996 to 2004, are generally called the “first-generation” K-pop groups. H.O.T., who debuted that year, along with Sech Skies, S.E.S., Fin.K.L, and Shinhwa shaped the K-pop idol industry as we know it today, and mostly targeted a domestic audience.

The second-generation K-pop idols refer to those who were active around 2004 to 2011, such as TVXQ, SS501, Big Bang, Super Junior, Girls’ Generation, KARA, and 2NE1. The second generation is credited with expanding Hallyu by targeting fans in Asia.

When we talk about the first generation, which focused on a domestic audience, and the second generation, which spread out to Asia, there are some groups that are hard to categorize. Rain, BoA, and Wonder Girls: all are idols that tried to break into the US but failed to make it big.

Some refer to them as the 1.5 generation. You might wonder why people wanted to branch out to the US even after several failures. However, the US pop music industry was a market that K-pop couldn’t ignore at that stage of its development.

Performing in the US brought as much money as a world tour, and the revenue from music sales and advertisements were also large. Succeeding in the US meant that you would become a world star. The problem was that the obstacles that one must overcome in order to gain that title were high.

In 2008, SM Entertainment tried to use the same method it used to gain success in Japan with BoA in the US. It formed SM USA and picked Max Gousse, who had produced music for some of the biggest names in hip-hop, as its US manager. SM signed an exclusive contract with Creative Artists Agency, or CAA, the largest agency in North America, to represent them in music, performance and marketing.

However, their preparations were not enough. While the Japanese pop industry was somewhat similar to that of the South Korean industry, in the US pop industry, BoA had to be situated in a different position.

Female solo artists in the US pop music market could be divided into three categories. Firstly, there were hip-hop musicians who were all about sex appeal. Then there were artists who flaunted their singing skills such as Amy Winehouse and Duffy, who sang jazz, soul and R&B. Finally, there were teen pop idols, who were idolized by young girls, such as Britney Spears and Christina Aguilera.

BoA was a girl with a small physique, who could sing while dancing dynamic choreography. She could not be placed in the first category and didn’t have the vocals to be put in the second. It was also difficult for an Asian woman in her mid-20s to win over the hearts of American teenage girls.

BoA couldn’t fit into any of those categories. The appeal of American female singers had not been analyzed enough. Of course, like the case of her success in Japan, a new category could have been created with the agency’s marketing. However, the manager of BoA’s label was the CEO of an indie label. BoA was unable to show her potential in such a background.

From then on, SM focused more on Asia, with producer Lee Soo-man often saying that “China will soon be as influential as the US.” The idea was that, once the East Asian network of South Korea, China, and Japan became livelier, it would become the largest pop music market on par with the US and Europe. There would be no need to leave that market behind and struggle to break into the US market, which had already proved to be a struggle.

SM Entertainment created TVXQ, which succeeded greatly in Japan, and Super Junior, which was a hit in China. These second-generation idols, with members specifically included so as to make it big in East Asia, established a strong fan base in Asia.

Psy performs “Gangnam Style” in Times Square, New York, on New Year’s Eve in 2012. (Reuters)

JYP Entertainment, led by Park Jin-young, chose to enter the US market with a production system like South Korea. The company believed that while pushing one artist would only be a one-off success, it would be easier for artists to break into the US market if the South Korean producing system became integral to the US market.

Park, who left for the US in 2004, tried to break into the US market by producing albums for US artists and expanding his network. He believed that it was important for producers to establish themselves in the mainstream US music scene. His efforts paid off, with Rain becoming the first Korean artist to perform solo at New York’s Madison Square Garden in February 2006. However, that was not enough to make sure that the production system would stick.

In 2009, JYP changed its approach by announcing the US debut of the girl group Wonder Girls. Since their debut in 2007, Wonder Girls had become one of the most successful groups in South Korea following the successes of both “Tell Me” and “Nobody.”

Their strategy was to work their way up from the bottom. They followed a more US technique, where singers performed on small stages, such as local clubs, to move up onto the big stage.

They partnered with CAA to follow the popular idol group the Jonas Brothers, on their national tour, and opened for them. In order to target the “low teen” (ages 8-14) fan base, they signed a deal with a US children’s clothing brand to sell their CDs in clothing stores.

Their endeavors did not go unnoticed. The English single, “Nobody,” reached No. 76 on the Billboard Hot 100 — which was a first for any South Korean artist. They also appeared on US daytime television. However, they failed to meet expectations.

Their popularity was not that high in the US, and they did not make much revenue. While Rain also doubled as an actor, the Wonder Girls’ US debut did not break even.

Wonder Girls’ venture into the US music industry ended in failure. Although it was a thoroughly “American” method, where the artists had to start from the very bottom, it was not the right way for Korean pop idols. The 2008 financial crisis worsened the situation, as US record labels backed out of their investment promises.

In the end, the group learned the hard way that it’s difficult to break through the thick barriers of the US music market unless the perception of Korean idol groups changed drastically, or unless they had a breakthrough moment that would boost their popularity.

In comparison, YG Entertainment was not so eager to expand overseas. This was due to the singer Seven’s struggle in the US in 2008. However, YG was not immune to the decline in music revenue in the mid-2000s.

YG turned to new media. It realized that television appearances were not enough to showcase the skills and potential of its artists, given the short airtime and limitations of sets, so YG started to utilize the internet. At the time, South Korea’s high-speed internet was one of the fastest in the world.

Fans from overseas also increasingly started to search for K-pop stars online. Fandoms grew in earnest with more direct communication with fans.

YouTube was the central medium for the global spread of K-pop. As fans around the world shared videos on social media, YouTube’s influence on the music industry grew. Videos of people singing and dancing were highly popular on YouTube, which could not have been more perfect for K-pop.

Most Korean agencies set up official YouTube channels and uploaded music videos there. Even if the artists did not go abroad, their videos quickly spread to fans all over the world. YouTube and social media have produced results that are many times greater than a decade’s worth of efforts to expand overseas. In this environment, YG’s Big Bang and 2NE1, and others attracted interest in North America.

This was a situation very different from when Wonder Girls sang in front of American children’s clothing stores a few years prior.

On July 15, 2012, the music video of “Gangnam Style,” the new song by the singer Psy, was posted to YG’s YouTube channel. Psy was well-known for his oddball antics and lyrics in Korea — in short, he was no typical K-pop idol.

He wasn’t a chiseled graduate of Korea’s celebrity training schools, nor did he have a fandom overseas. The “Gangnam Style” music video itself was a silly song aimed at Psy’s Korean fans.

But then something magical happened.

After the release of “Gangnam Style,” Sandara Park, a member of 2NE1 (also signed with YG), posted the music video on her Twitter feed. A few weeks later, music mogul Scooter Braun shared the video while tweeting, \"HOW DID I NOT SIGN THIS GUY!?!??!”

That proved to be the catalyst. By the end of the day, the “Gangnam Style” music video had racked up over 10 million views.

The song’s popularity began to explode. Within two months, “Gangnam Style” hit the top of the iTunes music chart.

On Sept. 22, it became the first Korean-language song to reach No. 64 on the Billboard Hot 100 singles chart; by the end of that month, it stood at No. 2.

The “Gangnam Style” music video was also the first stand-alone video to reach 1 billion views on YouTube. It topped music charts in more than 30 countries, including the UK, Germany, France and Australia.

That New Year’s Eve, Psy got top billing in a concert in Times Square, New York City. He gave an energetic rendition of “Gangnam Style” and did his trademark horse dance along with people from around the world.

It was a global phenomenon.

YouTube’s role in the “Gangnam Style” success story sent shockwaves through the pop music industry. The song didn’t resemble generic K-pop, and Psy himself wasn’t a product of the K-pop idol factory.

The music video was chock-full of corny moments, and some were even offended by the video’s ludicrous portrayal of Asians.

Nevertheless, the song’s down-to-earth and fun-loving style resonated with people in many countries, inspiring many to take a second look at K-pop. After “Gangnam Style,” K-pop became much more prominent on the world stage.

In short, social media empowered and accelerated the Korean entertainment industry’s ongoing efforts to escape the confines of the domestic market.

By Kim Yoon-ji, senior researcher at Korea Eximbank’s Korea Economic Research Institute

Please direct questions or comments to [english@hani.co.kr]