An at-home exercise bike has never been quote as stylish or millennial-baiting as the ones that Peloton has been peddling for the past 7 years. Since its founding in 2012, Peloton and its $2,245 bikes, paired with $39 monthly video subscriptions, have eclipsed even some of the most cult-like fitness ventures. As Fortune noted this month, credit card transactions analyzed by Second Measure revealed that Peloton eclipsed SoulCycle in 2018. Having already raised $1 billion in investor funds, the company is preparing for an IPO this year, but such sweeping success does not come without controversy of the legal kind.
On Tuesday, Peloton was slapped with a $150 million copyright infringement lawsuit in a New York federal court for allegedly “using more than 1,000 musical works” – from songs by Drake, Rihana, and Kanye West to those by some of the world’s most famous DJs, such as Tiesto, Benny Benassi, and the late Avicii – “over a period of years in the videos that it makes available to its hundreds of thousands of customers.”
The problem with that? The buzzy New York-based start up has failed to secure “a synchronization license for a single one of those songs,” according to a handful of big-name music publishers, such as Ole Music Publishing, which maintains rights in Justin Timberlake, Jay-Z, Nicki Minaj, and One Direction songs, among others, and Ultra International Music Publishing, which boasts a catalog of electronic music hits.
According to the plaintiffs, “textbook willful infringer” Peloton, which has been “reported to be valued in excess of $4 billion,” distributes “fitness videos, [which] contain music from start to finish.” The music used in these videos “is essential to creating the instructor’s desired atmosphere,” in addition to “providing a tempo for a treadmill run or stationary bike ride.”
“Peloton fully understood what the copyright law required, having entered into sync licenses with certain other copyright holders,” the plaintiffs assert, but opted to “trample [their] rights by using their musical works for free and without permission.”
As a result of the foregoing, the plaintiffs set forth a single claim for copyright infringement and are seeking “the maximum statutory damages resulting from Peloton’s callous and flagrant prior and ongoing infringement,” i.e., more than $150 million in damages, or $150,000 for each infringement.
A rep Peloton told TFL on Tuesday: “We just received the complaint this morning, and we are evaluating it. Peloton has great respect for songwriters and artists. In fact, we have partnered with each of the major music publishers, record labels and performing rights organizations, and many leading independents. We have also invested heavily to build a best-in-breed reporting and licensing system to support our partners and provide our members with a world-class fitness experience.”
UPDATED (March 25, 2019): Peloton’s library of workout videos is about to get much smaller, as the company announced that it will stop streaming ones that include songs it has been accused of using without permission, including those by Drake, Lady Gaga, Katy Perry, and Rihanna.
Per Reuters, “In a letter to Peloton members, Chief Executive John Foley said the company will no longer offer classes featuring the more than 1,000 songs named in the $150 million copyright lawsuit, which 10 music publishers filed on March 19.”
*The case is Downtown Music Publishing LLC v. Peloton Interactive, Inc., 1:19-cv-02426 (SDNY).