Investment banking insiders have obtained details surrounding the strategic partnership agreement signed by SM Entertainment and Kakao earlier on February 7. 

Previously, the business agreement between the two sides was simply known as an agreement through which SM Entertainment would issue new stocks for ownership by Kakao. 

Now, it's been revealed that the agreement contains several other notable clauses. First, SM Entertainment has agreed to give Kakao exclusive rights to distribute digital albums and physical albums by all SM Entertainment artists, including overseas distribution through Kakao's foreign subsidiaries. Up until now, SM Entertainment artists' albums have been distributed by Dream US, a company for which SM Entertainment is a major shareholder. Kakao, on the other hand, has managed the distribution of music by its subsidiary artists like IU, MONSTA X, IVE, and more.

SM Entertainment has also agreed to distribute ticket sales for domestic events including fan meetings and concerts to Kakao affiliated companies. Earlier this month, SM Entertainment announced intentions to "break free" from its exclusive contract with Dream US as to increase the number of concerts held by artists around the world. 

Next, insiders say that SM Entertainment and Kakao have left talks open for the possibility of establishing a jointly managed label for the discovery and launch of a co-produced, global K-Pop team. 

Meanwhile, HYBE Labels has recently issued a statement hinting at possible legal action should SM Entertainment issue new stocks with priority given to Kakao for goals, such as capital increase using company-owned funds.