The National Music Publishers’ Association (NMPA) representing 14 American music publishing companies and its case against the interactive fitness company Peloton has finally reached a conclusion after a year since the NMPA opened the original lawsuit. The two companies reached a settlement in February 2020 with a joint collaboration to further optimize the way Peloton obtains licenses. A sweet ending for a long, complicated copyright lawsuit.
The NMPA v Peloton
Peloton, a company that made close to $1 billion in a year with a revenue of $915 million, produces exercise bikes that use touch-screens to stream fitness classes led by instructors complete with music playlists. The lawsuit against Peloton claimed that the company did not obtain the licenses or rights for over 1000 songs and owed the NMPA $150 million in damages for using their clients’ music without their permission or fair compensation. Artists removed in Peloton’s workouts included Taylor Swift, Rihanna, Drake, and Lady Gaga.
According to Peloton’s S-1 file, the company paid $2.8 million in normal and recurring royalty expenses to music rightholders as well as another $16.4 million for “recorded content past use” to protect the company from legal action pertaining to any copyrighted material use. When NMPA filed its lawsuit, it found that there were only a few indie publishers undersigned to Peloton.
After the NMPA filed the lawsuit in March 2019, Peloton countersued and accused the association in violating federal antitrust laws by engaging in a coordinated effort to fix prices. Additionally, Peloton alleged that NMPA was also conspiring against it by preventing other companies from making deals with them. In January 2020, U.S. District Court Judge Denise Cote decided that although Peloton established evidence of the coordinated effort to fix prices, she dismissed the counterclaim citing that the company failed to define the “relevant market” that supports its claim.
Then in September 2019, NMPA raised the cost of damages to $370 million after discovering more music that was improperly licensed raising the total number of songs to 2468. All the while in the midst of the legal battle, Peloton customers were discouraged from using their bikes due to a lower quality in music. Customers voiced their frustration with the “crappy 80s tracks” that replaced the infringed songs bringing another blow to Peloton.
The Final Verdict
Finally, in mid-February of this year, a settlement was reached for both parties to begin collaborating to improve Peloton’s music and licensing systems and processes. After almost a year-long of legal back and forth, NMPA now boasts its partnership with Peloton saying that it’s an, “innovative company, and we are impressed with the company’s investment in technology and commitment to delivering a powerful, authentic music experience.”
Peloton, on the other hand, said, “with the NMPA’s input, we are confident our proprietary, state-of-the-art music system will provide an even more dynamic fitness experience for our millions of members worldwide,” about the settlement to collaborate. By working in tandem, both groups can create an opportunity for an additional revenue stream for songwriters and artists.