Spotify has revealed plans to raise subscription fees in France in response to a new tax targeting music streaming services operating in the country.
The move comes almost three months after the company promised to start divesting in France, initially drawing support from two festivals with the promise of more action this year – now we have a clearer idea of the kind of ‘action’ Spotify is cooking up.
The tax entered into force on January 1st and a 1.2% tax will be levied on Spotify and rival services including Deezer, Apple Music and Google’s YouTube Music, with revenue redirected to the National Center de la Musique (CNM) — was founded four years ago to support the French music sector. While all affected companies oppose the new law, Spotify has been the loudest, mainly due to the fact that it is the biggest player in the country.
Under wraps
Spotify did not reveal how much it is increasing prices by – it just said that going forward, French users will pay the highest subscription fees in the entire European Union (EU). The company plans to tell subscribers “in the coming weeks” how much extra they’ll be paying — while it appears part of the plan is to try to cause enough consumer concern to put pressure on the powers-that-be – However, the law is now in place , so it’s hard to see any changes in the short term.
The company he wrote in a blog post today:
“With the creation of this new tax, Spotify will have to give around two-thirds of every euro it makes in music to rights holders and the French government. Of course, this is a huge amount and does not allow for a sustainable business. As we have said for some time, we simply cannot absorb additional taxes.”
A Spotify spokesperson told TechCrunch that it was just trying to “be transparent with our users” that they should expect a price increase and that it had done “everything we could” to avoid it, but there was no way around it. .
The size of the market
What is perhaps the most telling part of this episode is how important France is to Spotify in terms of market traction. Her response here differs somewhat from her response to a similar shutdown in Uruguay, which is also in the process of passing a new law that promises “fair and just” pay for every artist involved in a recording. Spotify said it would leave Uruguay completely, arguing that the law would mean he would have to pay rights holders twice for the same tracks – his threat seemed to be working and he changed his mind to withdraw when the Uruguayan government gave assurances that music streaming platforms would not have to the coverage of any additional costs arising from the law.
As for France, Spotify is as vocal about the new tax as – if not more so – as it is about Uruguay, but has given no indication that it will leave the country. Although, like Uruguay, it maintains that it effectively pays artists twice (“equivalent to double payment”, as Spotify puts it), it would rather raise its prices than make any noise about leaving the country
In December, Spotify revealed that it was pulling support for Les Francofolies de la Rochelle and Printemps de Bourges festivals, which he had supported financially and with other resources. And now that it’s raising its subscription prices, this could be the last of its anti-tax actions — “It’s really about offsetting the cost of that tax, and hopefully the upcoming price increase will make sure we get there.” , Spotify said in an emailed statement to TechCrunch.
