Spotify is mad at the French government, and taking it out on users

Spotify said on Thursday that it will raise subscription prices in France in response to a new tax intended to support the country’s music industry. The company wrote open letter Condemning the tax the French government passed in late 2023. The streaming service has yet to say how much the price increase will be, other than to tease that “French users will pay the highest subscription fees in the European Union.”

French CNM tax puts a fee music services Earning more than 20 million euros ($21.9 million) in the country: Spotify, Apple Music and Deezer. (Apple Music and Deezer have opposed the tax, but have not announced similar price increases.) The companies pay a new 1.2 percent fee on all streaming revenue generated in the country. Social media companies that license music, including TikTok and Facebook, are also taxed. Salaries will go to the nation Central National de la Musica (CNM), a public body that supports and promotes the French music industry.

Spotify’s first response was in December draw Financial support from French music festivals Francofolies de la Rochelle and Printemps de Bourges. Company threatened When a similar tax was announced there, however, eventually pulling services from Uruguay withdrew When the Uruguayan government says streaming services won’t have to pay any fees.

Spotify hasn’t made similar threats to leave France, likely because the country is more important to its bottom line. Instead, he is waging a campaign of public pressure, including framing the music service tax as unnecessary government money that only partially funds the music industry.

“When CNM’s administrative budget (office fees, personnel, capital expenditures, media monitoring or professional training, etc.) is 20.2 million euros, this tax will generate approximately 15 million euros,” the company wrote in an open letter. “Our concern is that less than half of its total budget of €146.9 million will find its way into effectively helping music.”

Apart from listing CNM’s administrative budget, Spotify has not provided any evidence that the payments will not go to aid music.

Spotify’s revenue grew up In Q4 2023, it grew 16 percent year-on-year to 3.7 billion euros ($4.05 billion), which it described as a “very strong quarter.” Its CEO it was sold After a $64 million stock sale in October 2023, it has $57.5 million in stock in February.

“As we’ve said for a long time, we simply cannot accept any additional taxes,” Spotify wrote. “Even after artists made the difficult decision to cut our marketing budget and support French music festivals, which is an essential tool for Spotify to continue to bring hundreds of millions of euros to the music industry – it still continues to hamper our ability to operate. France. Accordingly, over the coming weeks and months, we will need to make changes to our pricing plan in France.”

Spotify says French subscribers will get more information about the price increase “in the coming weeks”.

Update, March 7, 2024, 3:08 PM ET: The story has been updated to attribute Spotify’s open letter to the company, not CEO Daniel Ek (as a previous version said).

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