In its latest ‘Music In The Air’ report, Goldman Sachs claimed that fitness-tech firm Peloton accounted for 17% of ’emerging platform’ recorded-music revenues in 2022 – a category that included games, short-video, fitness, podcasts and other new income streams for the music industry.
By our calculations, that meant around $267m of Peloton payouts last year, putting it behind only Facebook ($361m) and all gaming ($298m) but ahead of TikTok ($220m) and YouTube Shorts ($126m). Peloton is a significant player in the music industry’s new royalty frontiers, then. Which is why its financial health is important.
How is that health? Well, if it was a human patient, its doctor might be furrowing their brow in concern. Peloton’s latest quarterly financial results reveal that its revenues fell by 5% year-on-year in the second quarter of 2023 (its fiscal Q4) to $642.1m.
Meanwhile its members were also down 5% to 6.5 million people, and while the number paying for connected fitness subscriptions grew by 4% year-on-year to just under 3.1 million, the company lost 29,000 subscribers compared to the previous quarter’s figure. The company posted a net loss of $241.8m in its latest quarter.
“Not since I stepped into the CEO role have we had as many new irons in the fire to drive both short- and long-term growth,” wrote its CEO, former Spotify executive Barry McCarthy, in his letter to shareholders.
He cited the launch of a Peloton rental service; the company’s brand relaunch; new app subscription tiers; deals with Liverpool FC and the University of Michigan (with “more announcements about additional global partners in the weeks ahead”); and work to bring back its Tread+ treadmill with safety improvements as examples of those irons.
There are also some music stats in the financials. Peloton’s music royalties increased by $55.9m in its last financial year “driven by an increase in subscribers” according to its full financials filing.
That report also outlines Peloton’s minimum annual guarantee payments for music licences: $131.6m for its 2024 fiscal year (which runs until June 2024), then $48.8m in 2025 and $5m (at the time of writing – renewals will swell this figure) in 2026.
That’s why Peloton’s challenges are important for the music industry. It’s been something of a rollercoaster ride in recent years: $1.83bn of revenues in its fiscal 2020 surging to $4.02bn in 2021, but then a decline to $3.58bn in 2022 and now $2.8bn in 2023. Let’s hope those irons in the fire start to pay off.