Bike With Beyonce, Box With Drake: Fitness Companies Use Music to Battle For Customers

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Illustration by Mike Tofanelli

A year and a half after Peloton's publishing settlement warmed up the biz, fitness-tech music licensing is shifting into high gear.

"I don’t know about you, but I feel good," sings Pitbull as he pedals an Echelon stationary bicycle in the music video for his saxophone-infused EDM track, “I Feel Good.” It’s not just a product endorsement. The video is a piece of a partnership announced in June, in which Pitbull invested in the home-workout equipment company. Now he lends his name to an in-app channel, a co-branded bike and the song, written specifically for Echelon, which peaked at No. 15 on Billboard's Hot Dance/Electronic Songs chart in early October and gave its name to his U.S. summer tour.

He's not the only artist who has discovered a flair for fitness. Over the past year, exercise technology company Peloton has partnered with Beyoncé and Verzuz on classes that incorporate their music; SoulCycle parent company Equinox has signed up Lorde and the Jonas Brothers to promote their songs with virtual workouts on the Equinox+ platform, which lets users save tracks to Spotify; and Apple Fitness+ has pulled in stars like Shawn Mendes and Dolly Parton to narrate its guided audio Time To Walk series.

“Once a week, I’ve got a call with another fitness company,” says music attorney Elizabeth Moody, who works on licensing for clients like the home rowing machine company Hydrow and the boxing startup Liteboxer. "They need to go all out in order to compete because that's what consumers are expecting now. And that’s good news for the music industry."

It took some work to get there. Gyms that offer in-person classes don’t need more than blanket licenses from ASCAP and other performing rights organizations, but offering music with video online almost always requires a synch license as well, just as the use of music in a movie or TV show does. In 2019, when the National Music Publishers’ Association filed what would escalate to a $370 million copyright infringement lawsuit against Peloton, it "scared a lot of people" in the fitness space, says 7digital CEO Paul Langworthy, whose company manages music rights for clients like Barry’s Bootcamp. After the two sides settled in February 2020, however, “it was absolutely a driver for getting commercially licensed music into fitness.”

The agreement drove Peloton to sign licensing agreements with both publishers and labels. That occurred just as the coronavirus pandemic spurred the $100 billion fitness business to go virtual — and the connected apps that found an audience seem to be keeping it as gyms reopen. The exercise app business was worth $4.4 billion last year — a 53% increase from 2019, according to Grand View Research, which expects it to climb to $15.5 billion by 2028.

That could be a big boost for the music business, because fitness app companies now spend between 20% and 50% of their annual revenue on licensing, according to multiple sources. A February Macquarie Research report estimated that such companies could eventually spend $300 million a year on music.

Peloton, and many other companies, sell both hardware and a subscription service that offers video classes for which they need to license music. Many of them pay rights holders by setting aside a percentage of overall revenue for music, then dividing that up by aggregate usage the way Spotify and other streaming services do. (Endorsements and branded content deals require artists’ permission.) Unlike streaming services, however, this revenue in most cases is divided evenly among recording and publishing rights holders, much like it would be for other video uses.

That revenue is arriving just as streaming services are starting to run out of potential U.S. subscribers. (The United States now has over 110 million music streaming service subscribers in a country with 110 million households, and many executives expect growth to slow, although it’s hard to tell how much or when.) And it points to a promising future. Sony Music Entertainment CEO Rob Stringer says the company last year generated nearly $400 million in recording and publishing revenue from new sources, including fitness, plus social media and gaming, the two other areas executives are most excited about. And in September, Warner Music Group CEO Steve Cooper said that the company is collecting $235 million a year in recorded-music revenue from those sources. Both name-checked Peloton as an example.

“It isn’t vying with the traditional revenue of our business, but it is growing,” says Oana Ruxandra, WMG chief digital officer/executive vp business development. “Some of the biggest [fitness] players are becoming some of our biggest revenue drivers.” That growth involves startups like virtual reality company Supernatural, which synchronizes movements to song beats and lyrics and on Tuesday (Oct. 26) launched a new boxing feature, and established brands like Barry’s Bootcamp, which licenses music for its Barry’s X platform. And some services are willing to pay a premium to use music they think will attract an audience. In June, Universal Music Group signed an exclusive deal to license tracks by Drake, Kendrick Lamar, Katy Perry and others to Liteboxer, which lets users time their punches to beats. "We’re looking to license everybody that’s in a credible position to create value around our artists,” says UMG executive vp digital strategy Michael Nash. "Our door swings wide open."

Some new use cases contribute to “hotly contested” debates over how much fitness brands owe the music industry, says licensing consultant John Bolton, whose audio curation company, Super Hi-Fi, works with Peloton. “If you’re launching a streaming music service, there’s a rate card,” he says. “But with fitness, it’s still fairly new.” Moody says that after considering the cost and difficulty of licensing music, some startups simply use production music.

The fitness business will also be hard to crack for independent labels and artists who don’t make mainstream music. "You’re not listening to B-sides on Peloton," adds Bolton. "You’re listening to the hits."

One independent company, Anjunabeats label parent Involved Group is trying to tackle this by "embedding ourselves in the fitness community,” according to marketing director Duncan Byrne. The label made a deal this summer with the fitness app StrideKick that let fans who logged 10,000 miles of walking on the app unlock snippets of DJ and producer Genix’s unreleased album. And many say the important thing is how the "Peloton precedent," as licensing executives refer to it, established that these kinds of apps have to license music. It gives companies an incentive to use the music they’re paying for in ways that set them apart — which in some cases requires permissions that generate even more revenue for rights holders and artists.

"It’s not so much the stick as it is the carrot: Someone has proven that having a good music strategy is really good for their fitness business," says Dennis Kooker, Sony Music Entertainment president of global digital business and U.S. sales. "Others are seeing that and need to compete."

This story originally appeared in the Oct. 23, 2021, issue of Billboard.

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