Peloton's Head of Music Talks on Fitness Phenom's Stellar Growth, Despite Copyright Lawsuit

Peloton Bike
Courtesy of Peloton

           

For Peloton, 2019 wasn’t exactly a year of good news -- especially regarding its relationship with the music industry. 

In March, the popular exercise equipment and media company was hit with a $150 million copyright lawsuit by the National Music Publishers’ Association, which claimed Peloton had not obtained proper licensing to play certain copyrighted songs to accompany its ride-along video classes. 

Then in September, the NMPA doubled the suit to $300 million, claiming to have found more than 1,000 additional songs -- tunes recorded by Taylor Swift, Adele and The Beatles among them -- were used in Peloton videos without proper approval. The company removed the allegedly infringing songs and some users complained online about the subsequently lacking music selection. The case remains unresolved; the company countersued the NMPA in April for allegedly violating antitrust law and has asked the court to hold oral arguments over its claims that the NMPA encouraged publishers not to negotiate with Peloton. 

Yet even amid controversy, the fitness phenom continues to rapidly grow. From its latest quarterly earnings release (Nov. 5, 2019), the company reported a 103% increase in paid subscribers since November 2018 and now touts more than 1.6 million worldwide members. 

Peloton’s enduring popularity despite its recent tumult presents a unique challenge for Paul DeGooyer, head of music at Peloton: how does one use music to both attract and please new members -- hundreds of whom join every day -- as well as to reconnect with longtime users who became dissatisfied with the product?  

We caught up with DeGooyer to talk all things Peloton music: from surviving the lawsuit to growing the brand with Lady Gaga rides and Listening Parties celebrating the latest jams.

How would you describe music’s role in relation to the overall Peloton user experience? 

What interested me in Peloton is the fact that people aren't necessarily coming here to to listen to specific music. In fact, they're coming to have a powerful experience around self betterment and in that context it defeats the whole framing mechanism about how music is perceived and delivered. 

You kind of hear songs for what they are. You're in the [Peloton] class, you're working out, an instructor has picked the song to be especially effective for a segment of the class, and you hear it for what it is. You're either discovering something new without any sort of expectations or you're rediscovering something that you forgot about or may not have thought that you'd like in the first place. We have anecdotes of people who went down a Deep Purple rabbit hole that they never thought they'd go down because one of our instructors picked a deep cut.

How are songs acquired and selected to appear in a Peloton class? 

We built a proprietary system, which we call Crescendo, that is essentially our in-house streaming service -- and it has tools that are specifically designed for instructors to be able to search for music to fit [their classes]. There are search tools around [beats per minute], duration of song and some very interesting other little things, then instructors can create their own library. 

Some instructors are like DJs, essentially, and we also have five music supervisors who are assigned to each instructor. And so, they're generally connected at the hip in terms of, “hey, I heard this song ... but it doesn't seem to be in the system.” In some cases we'll go out and get that song, in some cases there's a song we may already have the rights for but we just haven't switched it on. 

We have a very good handle on what our members want and like, and what they're asking for. And we do pay a lot of attention to making sure that we're not playing the same stuff over and over again, And certainly not playing sort of the expected fitness stuff. 

Is there ever any directive for instructors to promote certain songs? 

Absolutely not. They choose their own. We don't promote anything, musically speaking. That's not the nature of our relationship with our members… They’re paying $39 a month on the hardware tier to have this experience. They don't need us selling them anything. 

Now, having said that, we know that the right song for the right moment drives a nice network effect. We did a Lady Gaga class four or five days ago. It's already over 100,000 [rides]. If 100k people are tagging those nine songs for their My Peloton Tracks playlist [which can be synced to users’ Spotify and Apple Music accounts], we know that our community's going nuts for it on our social stuff. And that to us is a great win.

How many songs are in the Crescendo library today?

It's over a million. We take advantage of the infrastructure that labels built to serve the streaming business. So, we basically get those feeds, and then we work to make sure that we have all the other rights that we need. 

Has music selection or the way you obtain music at Peloton changed since the copyright lawsuit?

Not really. We recognized early on that we would have to build a system -- effectively build it from scratch -- to be able to power the service in a way it was going to best serve the members and the company, and be able to ensure that any kinds of fitness experience we want to provide our members or what they're looking for can be powered in a future state. 

So we had already invested heavily -- and for example, we acquired a white label streaming service in June 2018, and was building this custom system. So the lawsuit really didn't change how we do our jobs. Crescendo made it a lot easier to ensure that we were licensed and compliant.

Was Crescendo created before the lawsuit or in reaction to the lawsuit?

We had been talking about having to build this custom system because we had explored every option that was there commercially off-the-rack, and we found them all wanting, let's just say. You know, Peloton's founders couldn't find an OEM (original equipment manufacturer) bike that they liked. So they designed and built their own. Our platform was built from scratch. So it was very much in keeping with the companies' ethos around us and what our members expect. 

And believe me, it was well underway. You can imagine the conversations and negotiations that took place prior to purchasing the company. So safe to say that it was over a year before the lawsuit was filed.

Following the lawsuit and subsequent removal of songs from certain classes, some users claimed a lack of variety in music. How did you and your team handle that? 

What was unfortunate in this case was there's not a lot of transparency around publishing rights. So, we ended up having to cut our library pretty substantially just out of an abundance of caution. We never wanted to be in a position where somebody is saying we're using them without a license. We didn't expect to be in that position. But we were talking to all the parties right after the filing of the lawsuit. So, it's safe to say that there was very little impact other than a lot of social [media] concern expressed by members and rightly so. 

But we were able to build back the library very quickly. What ended up happening is we had a ton of artists managers in particular, but also our legal and publishing partners coming in. I think, in some cases, they saw a service that they want to support. In other cases, it was maybe just them realizing that some share [of the programming] is up for grabs if a lot of stuff isn't being played. And one of the results is we start to get offered really great artist stuff, which you can see expressed in about 25 or 26 Artist [Series] classes. 

Artists featured on Peloton rides range from major label superstars like Gaga and Lizzo to indie musicians like Emily Warren and The Airborne Toxic Event, which riders might not have discovered otherwise. In terms of curation, what makes a song right for Peloton?  

We have some excellent music supervisors and instructors who just kind of know their business so cold that they are willing to experiment. We also know that our members want to hear some stuff that's maybe a little bit off the expectation and so this happens very organically. 

One of our spin instructors, Emma Lovewell, is particularly attuned to new music, and has an audience who loves that. And with her class, Listening Party, she's doing stuff that is brand spanking new and then she puts her touchstone in the class, Just so that her members can kind of have a point of reference. I think her first class had Doja Cat, King Princess, Mini Mansions, and then she put a Tame Impala track in there to help put the whole thing in the frame.

I noticed a recent spin class that featured NFL quarterback Cam Newton as one of the riders. Are more in-class celebrities on the way?

We actually did a class with Mustard, the producer and DJ, in September, which was kind of [a precursor to] that. Most artists don't want to hop on a bike and do stuff to their own music. With Mustard we were looking for an overlay, like connective tissue, to some great songs that our members might not realize were connected through this amazing artist -- and he collaborated directly with Alex Toussaint, another one of our great instructors, to bring that to our members, and then he was on a bike as well. That's cool and organic. But we really don't actively pursue putting celebrities in our classes. 

What can users expect from Peloton’s music experience in 2020?

As I said, we have a lot of inbound from artists and managers and we're at the point now where our artist rides are our hottest classes. I think we're up to four per month. We have a Billie Eilish class today.

We're now at a point where we're able to schedule those things really readily, and so expect more of that. If you take Emma's Listening Party as an example of cool things we can do with music, you'll probably see some more of that, too. And of course we want to continue to work toward better audio quality. And just making it better across the board. In terms of where we place our priorities, it's in our members.

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