Spotify will pass-on the music streaming tax imposed by the French government by hiking its subscription prices in that market.
As previously reported, France’s National Assembly last December approved a so-called “CNM Tax” on streaming brands, the funds from which would finance the national public body, The Centre National de la Musique (CNM), which was created in 2020 and is already partly financed by the live music industry.
The tax was predictably decried by the streaming services. For platforms that earn more than 20 million euros ($22 million) in annual turnover — including Spotify, Apple Music and Deezer — a new tax charge of 1.2% would be applied on all streaming revenue generated in France in addition to their existing tax duties. Social media platforms including Facebook and TikTok, which license and feature music, would also be subject to the taxes.
Spotify, the global market leader, said it couldn’t absorb the Macron government’s new costs and would offset them one way or another.
After announcing back in December that the streaming giant would pull its financial support to a number of local music festivals, Spotify today (March 7) confirms a price increase for its premium packages – applied only to subscribers in France.
Reps from Spotify claim the tax doesn’t add up. This new fee “will generate approximately 15 million euros, when the CNM’s administrative budget (office fees, personnel, capital expenditure, media monitoring or professional training etc.) sits at 20.2 million euros,” reads an open statement issued today.
“Our concern is that possibly less than half of its overall 146.9 million euros budget will find its way toward effectively aiding music.”
Spotify, the message continues, “has proudly championed French artists for the past 15 years; we certainly didn’t wait for the CNM to be created in 2020 to help artists find success in France, and outside of France; to help promote French repertoire and grow the royalty pool for French rights holders. Spotify’s payments have totaled close to 225 million euros in 2022 alone (or about 1/4th of all the French recorded music industry revenues for that year). That is up more than 200% percent since 2017.”
The price increase isn’t laid out, though Spotify promises to update its French subscribers over the coming weeks with full details.
“To put it bluntly, all French users will see their subscription plan fee go up,” the message confirms. “French users will now pay the highest subscriptions across the European Union.”
Read Spotify’s open-letter below.
Spotify Premium subscribers in France will soon experience a price increase due to additional costs on music streaming services imposed by the government, as part of the “CNM Tax.” While we worked very hard to encourage the government to avoid adding this tax, unfortunately they decided to move forward.
Perhaps you’ve never heard of the CNM – it’s a public body that commissions studies on the French music industry, and provides financial aid to record labels and the live industry. At the end of 2023, as part of its 2024 budget, the French government decided that digital music streaming services will now have to pay a new tax in order to finance it. Our worry, on top of what would be equivalent to a double payment on our part, has been that this tax will not go directly to artists, nor will it have a tangible output visible to fans; instead, it will simply come at the expense of listeners, and create an additional middleman – the CNM. In fact, this tax will generate approximately 15 million euros, when the CNM’s administrative budget (office fees, personnel, capital expenditure, media monitoring or professional training etc.) sits at 20.2 million euros. Our concern is that possibly less than half of its overall 146.9 million euros budget will find its way toward effectively aiding music.
Spotify has proudly championed French artists for the past 15 years; we certainly didn’t wait for the CNM to be created in 2020 to help artists find success in France, and outside of France; to help promote French repertoire and grow the royalty pool for French rights holders. Spotify’s payments have totaled close to 225 million euros in 2022 alone (or about 1/4th of all the French recorded music industry revenues for that year). That is up more than 200% percent since 2017.
Yet, 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. Even after making the difficult decision to reduce our artist marketing budget and support of French music festivals – which is an essential vehicle for Spotify to continue to drive hundreds of millions of euros to the music industry – it still continues to impede our ability to operate in France. Accordingly, over the coming weeks and months, we’ll need to make changes to our price plan in France.
To put it bluntly, all French users will see their subscription plan fee go up. French users will now pay the highest subscriptions across the European Union.
Spotify is increasing prices in France in order to offset these new costs. We’ll come back to our French subscribers over the coming weeks with the full details on the upcoming price increase.
For more information on the global streaming economy, the players, and the process, visit our website Loud & Clear.
This story originally appeared on Billboard
