Music Publishers v. Peloton: Claimed Copyright Damages Double to $300 Million

After analyzing thousands of recorded workout classes, music publishers discover an additional 1,200 songs allegedly infringed and file an amended complaint.
Courtesy of Subject

On Thursday, music publishers requested an amended complaint in New York federal court against tech-enabled exercise bike startup Peloton that would include new co-plaintiffs and add more than 1,200 musical works that the company is alleged to have infringed in workout videos. As a result, the amount of requested damages has doubled — from $150 million in the original filing to now more than $300 million.

"Indeed, it is only as a result of initial discovery in this lawsuit that the full scope and extent of Peloton’s unlawful infringement has started to come into focus," states the proposed amended complaint. "Those newly discovered works include some of the most famous and popular songs ever recorded, such as 'Georgia on My Mind,' 'I Can See for Miles' and 'I Saw Her Standing There.'”

The expanding scope of this copyright lawsuit is particularly significant timing given Peloton's ambitions to raise $500 million through an IPO. The company has sold hundreds of thousands of bikes to consumers since launching in 2012 and has a cult following among those pedaling to interactive training and entertainment, but it faces the allegation that it lacks requisite "synchronization licenses," necessary when music is matched to screen visuals.

Peloton's difficulty in securing licenses is identified as a risk factor in its S-1, the registration statement that lays out its business plans for public investors, and the company has stated it "intends to vigorously defend" itself in the suit. In court, Peloton has asserted counterclaims, alleging that music publishers have violated antitrust law. In particular, Peloton says the National Music Publishers Association "has instigated a coordinated effort" with some of its members "to fix prices and to engage in a concerted refusal to deal with Peloton."

The music publishers have moved to dismiss those antitrust counterclaims. They deny any collusion and say that each of the publishers reached independent decisions to forgo any comprehensive licensing deal and sue Peloton for infringement. A judge has yet to rule on the pending dismissal motion.

In the meantime, the music publishers tell the judge in a letter they have taken a comprehensive playlist produced by Peloton in discovery and matched sound-recording entries in the thousands of recorded workout classes. They say they've connected those compositions to owners and verified control over the works. As a result, they have realized that some works are controlled by affiliates who aren't currently plaintiffs.

The music publishers assert that the amendment won't delay the progress of the case.

Responding, Peloton gave THR this statement: "NMPA has again revealed its anti-competitive objective in this matter. In March, NMPA requested an expedited trial schedule, to which Peloton readily agreed. On the eve of court-ordered mediation, NMPA sought to alter the optics around its lawsuit by filing exaggerated new claims prior to the mediation while also transparently timing its filing to capitalize on Peloton's inability to publicly respond in detail during our quiet period. ... We will continue to defend ourselves against claims made in this matter and look forward to pursuing our counterclaims."