After months of speculation and anticipation, Spotify has announced its plans to raise subscription fees in France as a direct response to a recently implemented tax targeting music-streaming services within the country. This move comes soon after the company had made the decision to disinvest in France, initially withdrawing support from two music festivals. While the specifics of the increase remain under wraps, it is known that French users will soon be paying the highest subscription fees in the entire European Union (EU).
“With the creation of this new tax, Spotify would be required to give approximately two-thirds of every euro it generates to music to rights holders and the French government. Of course, this is a massive amount and does not allow for a sustainable business. As we have long said, we simply can’t absorb any additional taxes.” – Spotify spokesperson
The newly implemented tax, which went into effect on January 1st, imposes a 1.2% levy on not only Spotify but also its competitors such as Deezer, Apple Music, and Google’s YouTube Music. The proceeds from this tax are then redirected to the Centre National de la Musique (CNM), which was established four years ago to support the French music sector. While all the affected companies are voicing their opposition towards the law, Spotify has been particularly vocal due to its status as the largest player in the French market.
Spotify has stated that it will be informing subscribers of the increase “over the coming weeks” and has attributed the pricing change to the newly imposed tax. Despite its efforts to avoid this situation, Spotify acknowledges that it has no choice but to increase prices in order to sustain its business. However, it appears that the company also hopes to garner enough backlash from consumers to potentially drive a change in the law.
“It’s really about offsetting the costs of this tax, and we hope that the upcoming price increase will ensure we get there.” – Spotify representative
Interestingly enough, it is evident that France holds significant importance to Spotify in terms of market traction. Its response to this tax differs from its reaction to a similar situation in Uruguay, where a new law was being passed to ensure fair and equitable payment for artists. In Uruguay, Spotify threatened to completely withdraw from the market, citing concerns over having to pay rightsholders twice for the same tracks. However, they ultimately reconsidered and remained in Uruguay after reassurances from the government that streaming platforms would not be burdened with additional costs.
Despite expressing similar grievances towards the new tax in France, Spotify has made no indications of leaving the country. This is interesting, considering its previous actions of pulling support from festivals in France. The company has stated that the increase in subscription fees is a means of offsetting the costs of the tax, but it remains to be seen if this will be the end of their actions against it.
In the end, it seems that Spotify’s desire to sustain its business in France has led to this decision of increasing prices. As they continue to be transparent with their users, it’s clear that their hope is to find a way to offset the impact of this tax without taking any drastic measures such as exiting the market. Only time will tell if this strategy will prove successful for the company in the long run.
