Music publishers are pumping up their lawsuit against Peloton.
The National Music Publisher’s Association first sued the online exercise company for copyright infringement in March and requested $150 million in damages, claiming that Peloton used more than 1,000 songs without a proper license in its streamed workouts.
Now the NMPA has updated its complaint with another 1,324 songs that it alleges Peloton spun without permission, including hits from the Beatles, Adele and Taylor Swift. And it revealed late last week that it’s also doubling the damages that it’s seeking to $300 million.
“Since filing this lawsuit we have now discovered more than double the number of songs for which the plaintiffs’ songwriters were never paid by Peloton,” NMPA President and CEO David Israelite said in a statement to Forbes. “The fact that Peloton has gone this long without proper music licenses is astounding.”
The Verge reported that the NMPA found these additional tracks through legal discovery. “Newly discovered works include some of the most famous and popular songs ever recorded, such as [Ray Charles’] ‘Georgia On My Mind,’ ‘I Can See For Miles,’ and [the Beatles’] ‘I Saw Her Standing There,’” a spokesman said.
Peloton is countersuing the NMPA for anticompetitive behavior, telling MarketWatch in a statement that, “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.”
The new claims come as Peloton gears up for its initial public offering. Last week it set a target share price of $26 to $29, and revealed it wants to raise more than $1 billion by selling at least 40 million shares.
Peloton has sold more than half a million in-home stationary bikes (around $2,200 apiece) and treadmills ($4,295) that connect to streaming fitness classes, although what CEO John Foley says his company really sells is “happiness.” He described Peloton as a technology company, a media company, a software company, a product-design company, a retail company, an apparel company and “a social connection company” over calling it an exercise company. It’s valued at about $8 billion.
But one of its biggest risks, it said in its almost 200-page filing with the SEC, is its pricey workout playlists. Peloton’s virtual sweat sessions have become popular in large part due to the hit songs that spin during workouts. And Peloton revealed that licensing music over the last three years has run up a $50.6 million tab, and that it had three long risk factors related to its ability to properly license music — which was more risks than it disclosed for cybersecurity and data management, even.
“Unlike music streaming services, where having an exhaustive music catalog is vital to be able to compete for customers, we have control over what music we select for our classes,” it said in its filing. “As a result, we expect to be able to manage music expense such that, over time, these fees as a percentage of subscription revenue will flatten, or even decrease.”