Legal Risks in the Music and Entertainment Industry: How High-Profile Litigation Impacts Brand Value and Stock Performance

The music and entertainment industry, a cornerstone of global consumer culture, is increasingly shaped by legal risks that ripple across brand value and stock performance. From copyright disputes to antitrust investigations, high-profile litigation has become a defining feature of the sector's financial landscape. This analysis examines how legal battles-spanning music licensing, AI copyright claims, and antitrust suits-reshape investor perceptions, corporate valuations, and long-term brand equity.

Case Study 1: Peloton's Music Licensing Lawsuit and Stock Performance

In 2019, Peloton Interactive faced a $150 million lawsuit from the National Music Publishers' Association (NMPA) over unauthorized use of copyrighted music in its fitness classes. While the case was settled in February 2020, the financial and reputational fallout persisted. By September 2025, Peloton's stock price had plummeted to $8.10, a 97% drop from its pandemic-era peak of $162 in December 2020, according to Peloton's six-year price history. The decline was exacerbated by post-pandemic market shifts, but the lawsuit underscored the vulnerability of brands reliant on third-party intellectual property (IP). As Simply Wall St reported, the litigation forced Peloton to overhaul its licensing systems, adding operational costs and investor skepticism.

Case Study 2: Live Nation's Antitrust Lawsuit and Market Reaction

Live Nation Entertainment, owner of Ticketmaster, faced a seismic legal challenge in May 2024 when the U.S. Department of Justice (DOJ) filed an antitrust lawsuit alleging monopolistic practices in live event ticketing. Shares tumbled over 8% in extended trading immediately after the announcement, as Investopedia reported, though the stock later rebounded 67% by September 2025, according to Digital Music News. Despite this recovery, analysts remain cautious. A discounted cash flow (DCF) analysis on Simply Wall St estimates Live Nation's intrinsic value at $151.01 per share, suggesting the stock is overvalued by 7.2% relative to its current price. The company's price-to-earnings (PE) ratio of 68.5x, significantly higher than the industry average of 35.2x, reflects lingering regulatory risks, as Digital Music News reported.

High-Profile Celebrity Lawsuits and Brand Value

Celebrity-driven litigation also reverberates through brand value. Drake's 2024 defamation lawsuit against Universal Music Group (UMG) over Kendrick Lamar's diss track "Not Like Us" highlights the intersection of public perception and financial stakes. While no direct stock price data is available, the case underscores how reputational damage can indirectly affect corporate valuations. Similarly, Justin Baldoni's defamation suit against Blake Lively and Ryan Reynolds could alter public sentiment, impacting their respective brand partnerships and revenue streams.

AI and Copyright: A New Frontier

The rise of AI-generated content has introduced unprecedented legal complexities. In 2025, music publishers sued Anthropic, alleging that its AI model, Claude, reproduced copyrighted lyrics without permission. A federal judge ruled the claims plausible, allowing the case to proceed, as reported by Deseret News. Anthropic's previous $1.5 billion settlement with book authors signals a potential precedent, with broader implications for tech firms navigating IP law. Such cases could drive up litigation costs and force companies to invest in compliance tools like MatchTune's Rights Lookup.

Broader Implications for Investors

High-profile lawsuits often trigger immediate stock price volatility. Research indicates that a lawsuit announcement can lead to a 10% drop in stock value and a 20–30% decline in customer loyalty. For instance, Lady Gaga's trademark dispute over the "Mayhem" album logo not only incurred legal fees but also eroded brand trust. Additionally, regulatory scrutiny-such as the DOJ's focus on antitrust enforcement-can create long-term uncertainty, as seen with Live Nation's downgraded stock rating.

Conclusion: Navigating Legal Risks in a Litigious Era

For investors, the music and entertainment industry presents both opportunities and hazards. Companies must balance innovation with compliance, particularly as AI and digital platforms redefine IP norms. Brands that proactively address legal risks-through AI-powered licensing tools or robust IP audits-may mitigate financial exposure. Conversely, those entangled in protracted litigation face not only stock volatility but also long-term erosion of brand equity. As the industry evolves, legal resilience will be a critical determinant of market success.