Spotify has announced its decision to increase subscription prices for users in France, citing the implementation of a new tax by the French government aimed at bolstering the country's music industry.
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Spotify has expanded its subscription offerings by introducing a new plan focused solely on audiobooks.
Raising Subscription Prices
Spotify expressed its opposition to the tax, highlighting concerns over its potential impact on consumers. While the exact extent of the price hike has not been disclosed, Spotify hinted that French users could expect to pay the highest subscription fees across the European Union as a result.
The new tax, known as the Centre National de la Musique (CNM) tax, targets music services earning over 20 million euros in France, including Spotify, Apple Music, and Deezer. Although Apple Music and Deezer have voiced their opposition to the tax, they have not announced plans for similar price adjustments.
Under the tax scheme, Euro News reported that the affected companies are required to pay a 1.2 percent levy on all streaming revenue generated within the country.
Additionally, social media platforms licensing music, such as TikTok and Facebook, are also subject to the tax, with proceeds allocated to the CNM, a public institution supporting and promoting the French music industry.
Read also: Apple vs. Spotify: Coordinating with EU for Complaint Against Cupertino, In Response to $2B Fine
In December, Spotify responded by withdrawing financial support from French music festivals Francofolies de la Rochelle and Printemps de Bourges.
While the streaming giant previously threatened to cease its services in Uruguay due to a similar tax, it reversed course after the Uruguayan government exempted streaming services from covering any costs.
Criticizing the Tax
However, Spotify has refrained from making similar threats in France, recognizing its significant presence in the country's market. Instead, it has initiated a public pressure campaign, portraying the tax as an unnecessary government imposition that inadequately supports the music industry.
In a public letter, Spotify criticized the tax, highlighting discrepancies between the tax revenue and the budget allocation for the CNM.
Despite generating approximately 15 million euros, the CNM's administrative budget exceeds 20.2 million euros, raising concerns about the efficiency of the tax in supporting the music industry.
Apart from detailing the Centre National de la Musique's administrative budget, Spotify did not offer any substantiation that the imposed fees would effectively contribute to supporting the music industry.
In Q4 2023, Spotify experienced a 16 percent year-over-year increase in revenue, reaching €3.7 billion ($4.05 billion), a period characterized as a "very strong quarter." Notably, the CEO divested $57.5 million in stock in February, following a $64 million stock sale in October 2023.
Spotify asserted its position, emphasizing the challenge of absorbing additional taxes and the adverse impact on operations in France. Despite difficult decisions to reduce artist marketing budgets and support for French music festivals, essential for Spotify's contribution to the music industry, the tax continues to pose obstacles.
Consequently, Spotify intends to implement changes to its pricing plan in France in the forthcoming weeks. French subscribers can anticipate further details regarding the impending price adjustments in the coming weeks, according to Spotify.
