1:12pm PT by Eriq Gardner
Peloton Reports $49 Million in Legal Costs After Settlement With Music Publishers
Peloton Interactive spent $49.3 million in settlement and litigation costs this past financial quarter, likely reflecting what it took to get the tech-enabled fitness startup out of a massive copyright suit filed by song publishers. The figure was disclosed Wednesday in an earnings report by the company.
The music publishers had been alleging $300 million in damages in the closely followed case. Peloton, which went public last year, was accused of infringing thousands of songs by not properly obtaining sync licenses.
In the case, Peloton attempted to move to offense by asserting antitrust counterclaims, but in January, a federal judge rejected those claims. In the decision, U.S. District Judge Denies Cote noted, "Peloton does not explain why it cannot substitute songs with sync licenses owned by the Music Publishers for songs with sync licenses owned by other publishers."
With the leverage shifting to the publishers and with workout music being very clearly important to the success of Peloton, the parties eventually arrived at a settlement. That was announced in February. At the time, the parties didn't reveal the exact terms for ending the lawsuit, although the agreement included a pledge that Peloton and the National Music Publishers Association would collaborate towards a better approach to licensing.
Peloton now discloses the cost of settling the case. It comes at a time when people across the country are stuck at home thanks to the COVID-19 epidemic, with many splurging on a $2,245 bike to keep themselves physically and mentally fit. Those circumstances helped Peloton achieve a 66 percent increase in revenue to $524.6 million. Good tunes probably also don't hurt.