posted on: Thursday April 4, 2019
by Daniel O’Neill ’21 A&E Staff
The high-tech fitness company Peloton has stumbled into a large problem: a $150 million lawsuit for using unlicensed songs. Peloton creates home fitness machines with tablets that have the ability to create strictly music-driven workouts for customers. This is a revolutionary company in the marketplace today, but many people are wondering how the company managed to create their brand without getting the correct licenses for the music.
Artists that have had their music used unlawfully by Peloton include pop behemoths like Justin Timberlake, Rihanna, Lady Gaga, Bruno Mars, and Ed Sheeran.
Based in New York City and in possession of a relatively wealthy following, the fitness stationary bikes sell in the retail market place for a little over $2,000. Customers must also pay $39 per month to be able to use the live classes created by the company. This is where the music becomes a problem. The live fitness classes use specified playlists created by instructors to motivate customers. If the customers want to, they can even compete in virtual races with other users.
According to CBS News, Peloton has been dubbed the “Netflix of Fitness.” This is because the company managed to cross into two different industries: both fitness and streaming. Peloton has revolutionized both marketplaces, which is why many customers are confused as to how the startup company made such a blunder.
This issue of licensing in the music business, as well as outside of the industry, is something that many artists struggle with today. The main issue is the complications that arise when it comes to licensing; synchronization licensing is something that Peloton is targeted for. The problem here is that, for Peloton specifically, no publishers of the songs have agreed on a universally set fee for this sort of licensing. This seems to point to Peloton as being, in essence, lazy, since negotiations for this kind of licensing can be arduous and time consuming.
This system of licensing is one of the main sources of income for artists, since record companies in most cases take a large portion of the money from artists they sign. Essentially, this “sync” licensing is a surefire way for artists to be compensated for their craft. This is one of the reasons many customers of Peloton have taken issue with the company’s mistake resulting in a $150 million lawsuit.
Many of Peloton’s customers have sold their stock in the company. However, a lot of customers are staying with the company. Those customers who are staying with the company do not see the one glaring mistake of the company: Peloton got the correct licensing for some of the songs. That means that the company’s executives knew about the licensing requirements yet failed to acquire licensing for all songs.
The $150 million lawsuit is certainly hefty, yet many people think that Peloton essentially made a mistake; there was no malintent in their actions. Many of the classes that have been removed from the service due to the unlicensed songs were the most popular classes, yet executives of the company tell customers they are working hard to continue the quality of service that its customers enjoy.