Spotify has announced its decision to raise subscription fees for its users in France, citing a newly implemented tax targeting music-streaming services in the country.
This development follows Spotify’s declaration about scaling back its investments in France about three months ago. Initially, the company withdrew support from two festivals, hinting at further actions to come.
The tax, effective since January 1, 2024, imposed a 1.2% levy on Spotify and its competitors like Deezer, Apple Music, and Google’s YouTube Music.
The proceeds from this tax would be channeled to the Centre National de la Musique (CNM), which was established four years ago to support the French music industry.
Despite opposition from all affected companies, Spotify had been particularly vocal in its resistance, primarily due to its prominent position as the leading player in the country.
Spotify did not disclose the exact amount of its subscription fee increase; instead, it stated that French users will soon have the highest subscription fees in the European Union (EU).
The company stated that it will communicate the specifics of the additional costs to subscribers “over the coming weeks.”
While it seems that part of the strategy is to generate consumer dissatisfaction to exert pressure on authorities, the recently implemented law is already in effect, making any immediate changes unlikely in the near term.
The company wrote in a blog post on March 7, 2024, that “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’s Response in France and Uruguay
Spotify clarified that its recent price adjustment was an effort to maintain transparency with its users. The company emphasized that it had exhausted all available options to avert the price hike, but it was unavoidable under the circumstances.
A notable aspect of this situation is the significance of France for Spotify in terms of market influence.
The company’s reaction in this scenario contrasted with its approach to a similar situation in Uruguay, where a new law is underway to ensure “fair and equitable” compensation for every artist involved in a recording.
In Uruguay, Spotify initially declared its intention to withdraw entirely, contending that the law would entail double payment to rightsholders for the same tracks.
However, the company reversed its decision after the Uruguayan government provided assurances that music-streaming platforms would not be burdened with additional costs resulting from the law.
In addressing the new tax in France, Spotify expressed a level of dissatisfaction comparable to its stance in Uruguay, yet it had not hinted at exiting the country.
Despite asserting that it’s essentially making double payments to artists, a situation it likens to a “double payment,” Spotify prefers to implement price increases rather than contemplating an exit from the French market.
In December 2023, the company announced the withdrawal of support for the Francofolies de la Rochelle and the Printemps de Bourges festivals, which it had been financially backing.
Moreover, with the decision to raise subscription prices, it appears that this may be the extent of Spotify’s actions against the tax. In an email statement, Spotify clarified, “It’s really about offsetting the costs of this tax, and we hope that the upcoming price increase will ensure we get there.”
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