Spotify, one of the world’s most extensive streaming services, on Thursday said it would increase its prices in France over a new tax. The company argued that the French tax would fail to accomplish its goal of supporting music creation in the country.
Last year, the government decided to impose a 1.2% tax on the revenue streaming companies make in France starting this year to help finance music creation. The tax is aimed at helping small and medium-sized artists with their development. It is not the first time France has imposed such a fee on music services, but the streaming industry is not happy about it.
“While Spotify worked very hard to encourage the government to avoid adding this tax, unfortunately, they chose to move forward,” it said in an open statement. Spotify added that it expected to impose the charge on its subscribers in France over the next few weeks. The company did not lay out the exact price hike but promised to update its French users over the coming weeks with full details.
Spotify is not the only streaming service unhappy about the French tax; other services are also preparing to pass on the additional cost to their subscribers. A group of music streaming companies, including Apple Music, Deezer, and TikTok, joined forces this month to oppose the tax. They argued that the French government already has several ways to support the music community, including a 3.5% levy on tickets sold for major live music shows.
However, the French government argues that the new tax will help boost funding for a national body that supports all stakeholders in the music sector, The Centre National de la Musique. It is currently partly financed by a levy on ticket sales and the music industry’s collection societies.
The new tax, which will take effect in 2022, is expected to raise more than 225 million euros (£175.8m) for the music industry. It will be levied on all paid subscriptions of streaming services that generate more than 20 million euros in annual turnover in the country, but platforms with less than that figure will be exempt.
Streaming services like Spotify and Deezer pay royalties to the rights holders of the music they stream. The money is used to support artists and promote their works. They also reinvest it into creating new content.
In addition to the new music tax, the French government has increased taxes on cigarettes and alcohol to cut budget deficits. It has also pushed back planned increases in fuel duty.
