As Peloton prepare to take their business to an IPO after making nearly $1 billion in a year, artists are seeing next to none of the profits.

Peloton are an incredibly successful fitness company who have made a fortune from exercise bikes. ‘What makes these exercise bikes so special?’, you may say. These bikes come with motivational videos to spur people on as they’re spinning and these videos are backed by, what else… music.

In the 12 months ending in June this year, Peloton revealed that they made a whopping $915 million in revenue. As the company is now looking to lead up to an IPO for investment they have revealed their SEC filing which shows their financials over the period. It shows some very revealing things about their already rocky relationship with the music industry.

Their filing shows that the fitness company paid just $2.8 million out in “normal and recurring royalty expenses” in the fiscal year. It’s an improvement on the $1 million paid out in the fiscal year prior but still pales in comparison to the massive revenues they’re making.

It might not be a controversial figure if it weren’t for Peloton’s relationship with music rightsholders. Part of their report shows the company paid for more out in “recorded content costs for past use” than their current royalty expenses. $16.4 million was paid to rightsholders for what seems to be payments to protect them from using content in the past without compensation.

Earlier this year Peloton were sued by a series of music publishers who claimed that they has been using music without licenses for years. Major artists named included Ed Sheeran, Rihanna, Ariana Grande, Drake and many more, whose music they claimed had not been licensed for use in Peloton’s videos.

In response Peloton removed any of the classes featuring music involved in the case. But rather than pay up to $150 million in damages for over 1,000 musical works involved in the suit, Peloton decided to counter-claim music publishers.

Whilst the National Music Publishers Association were looking for up to $150 million in damages, Peloton listed their estimated costs in the settlement as ranging from $4 million to $11 million. Whilst the NMPA is seeking to have the counter-claim thrown out, Peloton claims they have “coordinated to collectively negotiate licenses in violation of antitrust laws”.

As for the original lawsuit, Peloton say in regards to their financial filing: “Amounts accrued for this matter are not considered material to the company’s financial position and the company continues to vigorously defend its position in the aforementioned outstanding matter and assess its legal position.”

They add: “Given the high level of content concentration in the music industry, the market power of a few licencors, and the lack of transparent ownership information for compositions, we may be unable to license a large amount of music or the music of certain popular artists and our business, financial condition, and operating results could be materially harmed.”