SoulCycle's music-centric business model relies heavily on music performance, yet pays surprisingly low royalty rates to rights holders through performing rights organizations (PROs).

Music serves as a fundamental component of SoulCycle's business, with the company describing its product as a "carefully curated 'cardio party'" in their SEC filing. Their instructors even claim that music "is the most important part" of their service.

The company is licensed by ASCAP and BMI under "general licensing," which typically covers venues like bars, restaurants, and fitness facilities. In 2013, ASCAP and BMI collected a combined $1.88 billion, with $226 million coming from general licensing.

The current licensing structure appears inadequate:

• BMI's maximum annual fee for a fitness club is $2,123
• This represents just 0.01% of a single SoulCycle location's class revenue
• ASCAP uses a flat-fee structure per location that doesn't account for premium pricing
• Neither organization considers the direct relationship between music and exercise

Distribution issues compound the problem:

• Revenue distribution relies on inaccurate proxies like TV and radio performances
• Modern tracking technology exists but isn't utilized
• Current system favors "Top 40" hits over niche genres commonly used in classes

While SoulCycle follows current licensing requirements, PROs need to:

1. Update their rate structures to reflect current market values
2. Implement modern tracking technology for accurate usage reporting
3. Improve distribution methods to better serve all rights holders
4. Consider the unique value music brings to specialty fitness businesses

As SoulCycle expands toward 250 locations with projected revenues of $775 million, addressing these licensing and distribution challenges becomes increasingly important for fair compensation to musicians and rights holders.

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