At-home exercise startup Peloton vehemently denies using unlicensed music in its workout videos, according to allegations that were brought against the company by the National Music Publishers’ Association (NMPA) last month in a $150 million lawsuit.
NMPA and members Downtown Music Publishing, Pulse Music Publishing, ole, peermusic, Ultra Music, Big Deal Music, Reservoir, Round Hill, TRO Essex Music Group and The Royalty Network initially filed the suit on March 19, accusing Peloton of copyright infringement on more than 1,000 musical works by artists like Drake and Ariana Grande. Peloton, which was recently valued at $4 billion, offers more than 13,000 recorded workout classes, most of which incorporate music, within its at-home streaming subscription service.
In a counterclaim filed this morning (April 30) and obtained by Billboard, Peloton denies each and every allegation put forth by the NMPA, claiming that it has obtained licenses from — and is paying — all “major” publishers, many independent publishers and the performing rights organizations representing all songwriters and publishers whose music included in its videos. The same goes for its relationship with major and independent record labels.
“Peloton is not the bad actor that Plaintiffs portray it to be,” the counterclaim reads. “Peloton values the musical element of its service offering and respects — and pays — the music rightsholders associated with that offering.”
Peloton also complains that traditional sync licenses are ill-suited for the company’s unique offering. While these licenses are usually issued one-by-one on an individual composition basis, and well in advance of the exhibition of the content, Peloton calls for multiple reproduction rights clearances to cover the music instructors wish to use in their classes, which are often planned mere hours in advance. According to the counterclaim, Peloton has invested “tens of millions of dollars” in developing an appropriate licensing system for its business, including its 2018 acquisition of a standalone digital music service provider Neurotic Media, Inc.
Furthermore, Peloton argues that by teaming up against the company, NMPA and its members are engaging in anticompetitive behavior, punishable by law. Peloton tried to negotiate with a number of music publishers well before the lawsuit, the company claims, but publishers “cut off their negotiations” at the urging of NMPA. Peloton is seeking damages and for the court to find NMPA in violation of antitrust laws.
“NMPA has instigated a coordinated effort… to fix prices and to engage in a concerted refusal to deal with Peloton,” the document reads. “Through these actions, NMPA has exceeded the bounds of legitimate conduct for a trade association and become the ringleader of concerted activity among would-be competitor music publishers, all in violation of the antitrust laws.”
While NMPA has acknowledged that Peloton has deals with some record labels and music publishers, the lawsuit argues that Peloton didn’t clear all the rights to all the songs used. In a new statement to Billboard in light of the countersuit, NMPA executive vp and general counsel Danielle Aguirre claims the association will continue to fight Peloton.
“Peloton’s countersuit has no merit and is an attempt to divert attention from the fact that it has been operating without sufficient licenses for years in order to build its multibillion dollar business,” Aguirre says. “The NMPA routinely defends the interests of its members’ copyrights in order to protect their value, prevent future infringement and to seek damages to which they are entitled under the law when their property has been stolen. Peloton’s countersuit is further evidence that it does not value its relationship with the music industry but is instead hostile to the people without which it could not have built its thriving business. We will continue to fight for the rights of music creators until they are paid what they deserve.”
Speaking with Billboard last month, NMPA president and CEO David Israelite compared Peloton’s licensing structure to “making the movie Bohemian Rhapsody and not bothering to clear the rights to use the Queen music,” arguing that the suit “could be the tip of the iceberg” of a much wider problem. The lawsuit is seeking more than $150 million in damages.
“There is this inexplicable situation where Peloton seems to have licensed properly some music, but not all music,” he said. “I’m sure there are other publishers whose songs are being used that are not currently included in our complaint, but we always have the ability to amend that complaint in the future.”
Shortly after the lawsuit was filed against Peloton, the company began removing classes featuring songs named in the lawsuit, “out of an abundance of caution,” said founder and CEO John Foley.
Peloton declined to provide further comment.