Spotify, the popular streaming service, has recently announced that it will be raising its subscription prices in France in response to a new tax implemented by the French government.
The company expressed its disapproval of the tax in an open letter, criticizing its impact on the music industry. Although the exact extent of the price increase has not been disclosed, Spotify has hinted that French users will now have to pay the highest subscription fees in the European Union.
The new tax, known as the CNM tax, targets music services that generate over 20 million euros ($21.9 million) in revenue in France. In addition to Spotify, Apple Music and Deezer are also subject to this levy.
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The tax imposes a 1.2 percent charge on all streaming revenue generated within the country. Social media platforms such as TikTok and Facebook, which license music, are also required to pay this tax.
The funds collected from the tax will be allocated to the Centre National de la Musique (CNM), a public institution that supports and promotes the French music industry.
In response to the tax, Spotify initially withdrew its financial support from two French music festivals, Francofolies de la Rochelle and Printemps de Bourges. However, the company did not threaten to exit the French market entirely, as it did in Uruguay when faced with a similar tax.
This decision is likely due to the significant importance of the French market to Spotify’s overall revenue. Instead, Spotify has chosen to launch a public pressure campaign, portraying the tax as an unnecessary government money grab that only partially benefits the music industry.
In its open letter, Spotify argued that the tax would generate approximately 15 million euros, whereas the CNM’s administrative budget amounts to 20.2 million euros.
The company expressed concerns that less than half of the CNM’s overall budget of 146.9 million euros would be effectively allocated to support the music industry. However, Spotify did not provide any evidence to support this claim.
Despite the tax, Spotify’s revenue has continued to grow. In Q4 2023, the company reported a 16 percent year-over-year increase in revenue, reaching €3.7 billion ($4.05 billion).
The CEO of Spotify has also sold millions of dollars worth of stock in recent months. Spotify emphasized that it cannot absorb any additional taxes and that the tax has hindered its ability to operate in France.
As a result, the company has stated that it will need to make changes to its price plan in France in the coming weeks.
French subscribers to Spotify will be informed of the price hike shortly. The company’s decision to raise subscription prices reflects its dissatisfaction with the new tax and its impact on the music industry.
As the situation continues to unfold, it remains to be seen how this dispute between Spotify and the French government will be resolved.
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