WSJ News Exclusive | Music Publishers Sue Roblox for Letting Game Creators Use Unlicensed Songs

The publishers, including Universal Music Publishing, and artist DJ Deadmau5, say the company hasn’t licensed the music many of its creators have used in their games, resulting in lost income. The suit, filed in the U.S. District Court of the Central District of California Western Division, seeks at least $200 million in damages. Other publisher plaintiffs include entities tied to Big Machine Records, Concord Music Group, Downtown Music Publishing, Kobalt Music Group and

Hipgnosis Songs Fund.

The suit alleges that Roblox, which had 42.1 million daily users as of March, sells users the option to insert virtual music players, or boomboxes, into games they create on the platform and that pump out copyrighted music. The boomboxes, which have been purchased by hundreds of thousands of users, play songs recorded by artists such as Deadmau5 and Imagine Dragons.

“Roblox actively preys on its impressionable user base and their desire for popular music, teaching children that pirating music is perfectly acceptable,” the complaint says.

Roblox declined to comment.

The lawsuit is the latest in a series of discussions and disputes between music rights holders and companies, such as

Peloton Interactive Inc.,

ByteDance Ltd.’s TikTok and

Snap Inc.’s

Snapchat over their or their users’ use of music in content that lives on their services. In some instances, companies, notably

Facebook Inc.,

have agreed to enter into broad licensing arrangements with music labels and publishers to cover the music consumers use. Peloton and publishers settled their suit early last year and reached a licensing agreement for use of the publishers’ songs going forward.

Though licensing matters have at times become contentious and even litigious, music labels and publishers are broadly excited about finding new partners across social media, videogames and fitness for revenue beyond streaming on services such as

Spotify

and Apple Music. The pandemic has accelerated the growth of at-home fitness apps and gaming and streaming companies, which have relied on music as a draw to live-steamed or on-demand classes, in-game experience, and gaming live streams.

Roblox, which operates a free online platform with millions of games created by its own users, is among the fastest-growing companies in interactive entertainment. It became a hot stock when it went public via a direct listing in March and as of Wednesday had a market capitalization of about $52 billion, greater than that of “Madden NFL” maker

Electronic Arts Inc.

and “Grand Theft Auto” maker

Take-Two Interactive Software Inc.

The company said it has 42.1 million users as of March.

In recent years videogame companies have been teaming up with artists to host original virtual performances inside their games to boost engagement, in some cases drawing millions of attendees. Roblox has featured concerts by artists such as rapper Lil Nas X and the bands Why Don’t We and Royal Blood. Epic Games Inc.’s “Fortnite” has done the same with DJ Marshmello, rapper Travis Scott and others. But the events are distinct from when users create their own content and insert copyrighted recordings without permission, or download the boomboxes.

In a securities filing ahead of its public debut, Roblox warned investors that it could encounter problems in this area. “As we face increasing competition and gain a higher profile, the possibility of intellectual property rights and other claims against us grows,” the company said in the filing. “Our technologies may not be able to withstand any third-party claims against their use. In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them.”

During the National Music Publishers’ Association annual meeting Wednesday, Chief Executive David Israelite said Roblox has “enticed and manipulated mostly children” into pirating music.

“They’ve made hundreds of millions of dollars by requiring users to pay every time they upload music onto the platform—taking advantage of young people’s lack of understanding about copyright—and then they take virtually no action to prevent repeat infringement or alert users to the risks they are taking,” he said.

The NMPA, which helped organize the lawsuit, said it would also launch an intensive take-down campaign against

Amazon.com Inc.’s

live-streaming service Twitch.

Twitch is popular among gamers who stream video of themselves playing, often with music in the background. Rights holders and the service haven’t progressed meaningfully on licensing discussions for use of music in its user-generated content, and the NMPA said it intends to be more aggressive with asking Twitch to remove the streams containing infringing works.

A spokeswoman for Twitch said it continues to work with labels and publishers to avoid further takedown notices.

Last year, Twitch began urging its users to ensure they have been compliant when playing copyrighted music during their broadcasts on the platform. The company said at the time that representatives for major record labels had sent thousands of notifications to its users requesting they remove unlawful content from their archived streams.

Write to Anne Steele at [email protected] and Sarah E. Needleman at [email protected]