Spotify promises that its French subscribers will soon pay the highest streaming prices in the entire EU as part of the fight against France’s new streaming tax, which will also apply to rivals such as Deezer, Apple Music and YouTube Music. The levy came into effect in January and is intended to help emerging musicians and the French music sector in general.
So far, Spotify is the only one of the top music streaming services to promise a price increase, and so far there’s no word on how much that increase will be. But given the tone of the communication so far, it seems highly unlikely that it is about a few cents. According to Spotify’s blog post, the new 1.2% levy – roughly 13 cents on Spotify’s $11.99 per month – is “a huge amount” that Spotify “cannot absorb.”
Spotify has already stopped funding the French music festivals it sponsored, and has also cut the money it gave to marketing initiatives for artists in the country.
Total revenue per year from the levy is expected to be approximately €15 million/$16 million from all streamers combined; as the market leader in France, Spotify would pay more than its rivals.
Streamers versus France: it’s war
If you’re cynical, you might wonder if this is really about the money. After all, the levy is only a fraction of the amounts Spotify’s loss-making podcasting division pays to Joe Rogan, which is one reason the company is losing money despite growing subscribers and revenues. And it’s a drop in the bucket compared to the amount of money CEO Daniel Ek made from selling Spotify shares in the past twelve months.
The expected revenue of €15 million is only slightly higher than the €14 million that all streamers – except Amazon – offered to pay as annual voluntary contributions to the same organization that will help finance the levy, the Center National de la Musique. But of course a voluntary contribution can be stopped if the participants no longer feel like doing volunteer work.
If it seems likely that Spotify will increase its prices by more than the levy to try to create bad consumer feeling towards the French authorities, other streamers may follow suit. Deezer CEO Jeronimo Folgueira called the levy “the worst possible outcome of all the different scenarios we could have ended up with,” and as we’ve seen with streaming in other markets, there’s often a domino effect. Folgueira has already said it was possible that Deezer would pass on the additional costs “along the value chain.”
It seems unlikely that a small price increase would result in a cover version of the French Revolution, or that Spotify could raise its prices high enough to cause enough anger at the French government without shooting itself in the foot. But perhaps a longer game is being played here. If prices rise in France and there is no significant subscriber churn as a result, this will strongly indicate that streaming prices may rise in other markets as well.