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BTS’s Loyal Army of Fans Is the Secret Weapon Behind a $4 Billion I.P.O.

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It’s 10:30 on a Monday night, and Ashley Hackworth is putting the final touches on a personal project to make the world’s biggest boy band a little bit bigger.

Ms. Hackworth, who teaches English in South Korea, is on a Zoom call with five other fans of the Korean pop group BTS, planning a virtual meet-up for followers. An online game for the event still needs work. Someone has to reach out to local radio stations about media coverage. And who can contact potential sponsors?

Their fan group will not be paid a dime for promoting the band. But without their efforts, and those of a vast network of other hyper-dedicated fans, the Korean company that manages BTS, Big Hit Entertainment, would not now be a multibillion-dollar enterprise.

On Thursday, shares in the company will begin trading in South Korea, capping off the country’s most hotly anticipated initial public offering since 2017. Institutional and retail investors across the world scrambled to get a piece of Big Hit before the listing, with hundreds of pre-orders for every share. Big Hit, which reported a profit of $86 million last year, is valued at around $4 billion, after raising more than $800 million by offering investors about 20 percent of the company.

Naturally, there are some concerns about an enterprise whose main product is a boy band — a product not known for its long shelf life. For now, though, many investors see the listing as a golden opportunity, amid a global recession, to own a slice of a musical phenomenon that was the world’s most lucrative touring act last year and, by one estimate, adds more than $3.5 billion annually to South Korea’s economy.

ImageAshley Hackworth, holding a BTS light stick, and other global fans of the group call themselves the Army. The light sticks, known as Army Bombs, are connected by Bluetooth and flash along to the band’s music. 
Credit…Jean Chung for The New York Times

But what these investors are really paying for is not necessarily Big Hit or even BTS. It’s a huge and highly connected ecosystem of fans like Ms. Hackworth with a deep, even life-changing, attachment to the group and its message of inclusivity and self-love.

BTS supporters, who call themselves the Army, don’t just attend concerts or buy the band’s seemingly endless stream of merchandise (although they do plenty of that). They have organized themselves into groups that perform a host of services on the band’s behalf, from translating a fire hose of BTS content into English and other languages (applications required, experience preferred) to paying for advertising and running highly coordinated social media campaigns.

Big Hit’s biannual corporate meetings receive millions of views online from hard-core fans, who scrutinize business strategy. And like any good company, the Army is obsessed with metrics: One Twitter account, @btsanalytics, which pumps out bone-dry data on album sales, YouTube views and music streaming numbers, has more than 2.5 million followers. Fans use the numbers to set, and follow through on, ambitious goals for BTS song and album releases — an approach intended to help the band climb the global charts.

Fans also look out for other fans. Lawyers educate followers about legal issues. Teachers offer tutoring. And as Big Hit’s I.P.O. approached, those with investment backgrounds started online chat groups to counsel less financially savvy fans on the ins and outs of investing in the company.

“We’re Army Incorporated,” Ms. Hackworth, 30, said during a recent interview from her apartment, where the group’s posters and seven branded baseball caps, one for each member, decorated the walls. The fan group functions like any company, she joked, although “no one is in charge of us, really, and we don’t have a C.E.O. unless you consider that BTS.”

The Army, whose name stands for Adorable Representative M.C. for Youth, is often depicted as a group of screaming teenage girls. The reality is different: While its demographics are hard to pin down — many members seem to be women in their 20s and 30s — the band’s fan base is broadly diverse, cutting across lines of gender, age, religion and nationality.

Credit…Jean Chung for The New York Times

Compared with fan groups that have come before them, BTS’s followers are “so much savvier and strategic and smarter than what we’ve seen, especially in taking advantage of and utilizing platforms like social media to really achieve their goals,” said Nicole Santero, a Ph.D. student at the University of Nevada, Las Vegas, who has conducted extensive research on the Army.

BTS — whose name is an abbreviation of the Korean words Bangtan Sonyeondan, or Bulletproof Boy Scouts — has won a large following with its boyish good looks, slick dance moves and catchy music, spanning genres from rap to disco.

But what fans really respond to is the band members’ carefully cultivated and inspirational story of fighting their way to the top of the music business while staying true to themselves, Ms. Santero said. Their emotional openness and focus on mental health make fans “feel that BTS represents something that has impacted them and changed their lives, so supporting them is sort of their way of giving back to the group,” she said.

That devotion has allowed Big Hit to make BTS, which declined a request for an interview, into something more than just a band or even a brand. It is also a kind of lifestyle product, incorporating a dizzying array of content and merchandise, from variety shows to web comics, from video games to Korean-language courses. Its language textbooks are taught at Middlebury College and the École Normale Supérieure, one of France’s most prestigious graduate schools.

One of Big Hit’s early innovations was to provide fans with hours of video showing the group’s members going about their daily lives — eating, working out and even just relaxing — creating an unusual level of intimacy with their followers.

Big Hit’s approach, which it describes as offering “music and artist for healing,” has set it apart in an industry notorious for coldly rational business calculations and paternalistic treatment of artists. Most of Big Hit’s Korean competitors build musical groups from the top down, recruiting thousands of trainees annually and spending years drilling them in singing, dancing and public comportment.

But Big Hit bet that fans would prefer human vulnerability to superficial polish. While the company is fiercely protective of BTS’s image, it describes itself as the group’s partner, and it has given the band members a degree of freedom uncommon in the world of corporate K-pop.

The Army has embraced the image projected by the company and its founder, Bang Si-hyuk, a longtime music producer who in 2010 discovered BTS’s leader, RM, then a 16-year-old underground rapper, and built the group around him. Fans view Mr. Bang as a doting father figure who raised the men from obscurity and supports their interests, whether that means making albums with references to Carl Jung or starting an initiative to promote contemporary art.

In the lead-up to the I.P.O., Mr. Bang demonstrated his commitment to treating the BTS members as equals by giving them more than 478,000 of his own shares in the company. Army members applauded the move, although some questioned whether Mr. Bang — who holds 43 percent of the company and is set to be worth nearly $1.4 billion — should have given the men more.

He would do well to keep the group and its fans happy. BTS accounted for almost 88 percent of the company’s sales in the first half of 2020, down from more than 97 percent during the same period the previous year.

Credit…Jean Chung for The New York Times

That dependence on BTS is investors’ biggest concern. The normal worries that a company might have about any pop group — like the possibility of its breaking up or leaving the label — are exacerbated in South Korea by the country’s mandatory 18-month military service for men. Barring a change in the law or a deferment, BTS’s oldest member will have to report for duty as early as the end of next year, with the other members close behind.

Big Hit has tried to reduce those risks by diversifying. It now has five acts in addition to BTS. More important, it has positioned itself as a “content creator” in the vein of Disney, with BTS essentially playing the role of Mickey Mouse — a priceless intellectual property that can be spun off in almost limitless directions.

That means projects like the BTS Universe, a fantasy world populated by fictional versions of the band. The concept is similar to Disney’s approach to the Star Wars or Marvel Comics franchises, drawing fans into a constantly expanding cosmos of new content and merchandise that can eventually accommodate Big Hit’s other musical acts.

The company has also built its own social media platform, WeVerse, a commitment to digital content that is already paying off. Big Hit has increased its revenue sharply in 2020 even as the coronavirus forced BTS to cancel its sold-out world tour. Over the weekend, the group held a two-day online concert through WeVerse for which it sold nearly a million tickets, costing at least $43 each.

The concert rode the band’s success on the music charts. In early September, thanks to a push by the Army, BTS’s first English-language single, “Dynamite,” debuted at No. 1 on Billboard’s Hot 100 — a first for a Korean pop group. On Monday, another of its songs, a remix of “Savage Love,” also debuted at No. 1, further raising the high expectations for Big Hit’s share listing.

Laksmi Astari, 22, an Indonesian student majoring in fashion design at Sookmyung Women’s University in Seoul, is planning to pool money with her sister and a cousin to invest in Big Hit — her first time buying stock.

Credit…Jean Chung for The New York Times

She is not overly concerned about potentially losing the money. She sees shares in the company as a kind of merchandise that might one day pay for itself.

“I get to invest in idols that I like, and it allows me to stay connected to BTS,” she said.

For Big Hit, a lot is riding on whether it can persuade fans like Ms. Astari to channel their enthusiasm toward the company’s other acts.

It might be a hard sell. Ms. Hackworth and the other members of her BTS fan group said that while they were enthusiastic about the prospects for Big Hit’s share offering, they were doubtful that lightning could strike twice.

“There’s no replication,” Ms. Hackworth said. “There’s just one BTS and one Army.”

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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