Spotify stated on Thursday it is going to elevate its subscription costs in France in response to a brand new tax designed to help the nation’s music trade. The corporate wrote an open letter denouncing the tax, which France’s authorities handed in late 2023. The streaming service hasn’t but stated how excessive the value hike shall be, apart from teasing, “French customers will now pay the best subscriptions throughout the European Union.”
France’s CNM tax imposes a levy on music companies that earn over 20 million euros ($21.9 million) within the nation: Spotify, Apple Music and Deezer. (Apple Music and Deezer have opposed the tax however haven’t introduced related worth hikes.) The businesses pay the brand new 1.2 p.c cost on all streaming income generated within the nation. Social media firms licensing music, together with TikTok and Fb, are additionally topic to the tax. The charges will go to the nation’s Centre Nationwide de la Musique (CNM), a public establishment supporting and selling the French music trade.
Spotify’s preliminary response in December was to drag monetary help from French music festivals Francofolies de la Rochelle and Printemps de Bourges. The corporate threatened to drag its companies from Uruguay when the same tax was introduced there however in the end backed down when the Uruguayan authorities stated streaming companies wouldn’t need to cowl any prices.
Spotify hasn’t made related threats to exit France, doubtless as a result of the nation is rather more essential to its backside line. As a substitute, it’s waging a public stress marketing campaign, together with the music service portray the tax as an pointless authorities cash seize that solely partially funds the music trade.
“This tax will generate roughly 15 million euros, when the CNM’s administrative funds (workplace charges, personnel, capital expenditure, media monitoring or skilled coaching and many others.) sits at 20.2 million euros,” the corporate wrote within the public letter. “Our concern is that presumably lower than half of its general 146.9 million euros funds will discover its means towards successfully aiding music.”
Apart from itemizing the CNM’s administrative funds, Spotify didn’t present any proof that the charges wouldn’t go towards aiding music.
Spotify’s income grew 16 p.c year-over-year to €3.7 billion ($4.05 billion) in This autumn 2023, in what it described as “a really sturdy quarter.” Its CEO bought $57.5 million in inventory in February, following a $64 million inventory sale in October 2023.
“As we now have lengthy stated, we merely can’t take up any further taxes,” Spotify wrote. “Even after making the tough determination to cut back our artist advertising funds and help of French music festivals — which is a vital car for Spotify to proceed to drive a whole bunch of thousands and thousands of euros to the music trade — it nonetheless continues to impede our potential to function in France. Accordingly, over the approaching weeks and months, we’ll must make modifications to our worth plan in France.”
Spotify says French subscribers will be taught extra concerning the worth hike “within the coming weeks.”
Replace, March 7, 2024, 3:08 PM ET: The story has been up to date to attribute Spotify’s open letter to the corporate, not CEO Daniel Ek (because the earlier model said).
