Working Out a Settlement

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Peloton’s legal position

Most of us have seen the commercials advertising one of the most sought-after at-home fitness equipment products.  While the interactive live videos on the Peloton screens are intended to pump up the energy of the user, the music and workouts help eliminate, what some people might consider, the “boring” element of exercise.  Although this brand of stationary bike is seriously one of the best in the industry, with prices starting at $2,245, the company has seen a slight decline in its stock.  A possible cause for this drop could be the lawsuit surrounding allegations that Peloton streamed over 2,400 songs in their workout videos without prior authorization.

The National Music Publishers’ Association, as well as 14 of its members, sought damages in the amount of more than $300 million.  Originally filed in March 2019, the trade group claimed Peloton did not obtain licenses before streaming songs from artists like Ariana Grande, The Who, The Beatles, Taylor Swift, Maroon 5, and Adele.  In response, Peloton filed a counterclaim against the National Music Publishers’ Association, claiming its contracts with individual publishers were interrupted by the trade group.  A Manhattan federal judge dismissed the counterclaim.  Four weeks later, Peloton and the trade group reached an amicable reconciliation.

The settlement is considered a joint collaboration agreement, one in which both Peloton and the National Music Publishers’ Association will work to enhance Peloton’s licensing procedures.  It is the goal for all parties involved to justly benefit from the Peloton experience.  Such benefit would include fair compensation to songwriters and publishers, as well as Peloton’s continued incorporation of upbeat music in its workout videos. While this was the main incentive behind the settlement, other definitive terms were not revealed to the public.  For now, Peloton has avoided a catastrophic business impact and remains one of the most desirable brands for at-home workout equipment.