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03/25/2019
Article
How to Avoid the Peloton Problem

Fitness brand Peloton is currently being sued by a fleet of indie publishers demanding unpaid royalties for songs used in the company’s training videos. What lessons can brands that use a lot of music take away from this episode? What do rights holders need to bear in mind moving forward? We asked Bob Barbiere, Chief Strategy Officer and SVP Global Licensing for DJ-centric distribution platform Dubset, for some context.

What do brands need to do to avoid getting into hot water with rights holders?
As a licensing-centric company, Dubset learned early on that brands must be protected from the risks of licensing. We always recommend to brands and others not directly affiliated with the music industry to work through third-party agents that truly understand and have experience in all aspects of music licensing, particularly those that assume all risks and liabilities.

Why do high-profile companies think they can get away with not paying for music, when their content is widely disseminated?
Great question. I’d like to believe it’s not so much “getting away without paying” as it is the complexities associated with it. Specific to composition and publishing, licensing is incredibly complex. There are sets of licenses for live venues (think of music playing at a health club), while there are other licensing structures when you stream music to consumers, and then there’s licenses specific to the attachment of music to video (synchronization). So imagine when you have some crossover thinking you licensed everything correctly when in reality you left a couple of holes. In this case it appears Peloton did a bunch of licensing but the holes that might exist appear pretty big based on the claims.

Making it worse is the fact that technology has evolved so quickly over the past fifteen years that the restrictions and licenses associated with music have reached the point in some areas that they no longer make sense. There are amazing opportunities for brands to take advantage of with the advent of digital music distribution.

Dubset was created specifically to remove the licensing challenges in a space occupied by brands, content creators, artists, and composers, where it was previously impossible for any brand to associate themselves with a DJ set. Now, not only can we deliver a liability-free solution (the brand’s attachment to a piece of music) to the brand, we can do so within hours, not months or years. While there will continue to be some trip ups, there’s enough licensing specialists available to brands to ensure cases like Peloton’s are more the outlier than the norm.

How much money is waiting to be excavated in similar unlicensed uses?
It really depends upon the energy and focus rights holders and licensing agents want to put into it. As Peloton is learning, there are statutory penalties for infringement that very quickly can run into the billions. Music and technology are now bringing a new level of consumer access, but that access comes with risk. Even so, I see a lot of great licensing-tech companies now bringing licensing efficiency, reducing market friction, with the proper connection of brands to content in a manner that facilitates scale and success.