Music streaming services have raised concerns over the French government’s proposed tax on music streaming services. Amongst the companies slamming the new plans is Spotify, which has warned that such a move may lead to the company deprioritizing France in the future.
Antoine Monin, the Director General of Spotify France, expressed his dismay, labeling the tax a “monumental strategic error, which goes against the issues of economic, cultural and European technology”.
In an interview with French news channel France Info, Monin highlighted the potential adverse impact on European streaming companies, particularly Spotify and Deezer, compared to their US-based counterparts such as Apple, Amazon, and YouTube.
Monin argued that the tax would disproportionately affect European platforms, given their dominance in the French streaming market and their primary focus on music streaming, in contrast to the diversified portfolios of the tech giants.
“The adoption of this tax is really a blow to the music sector, to innovation and to European independent platforms like Spotify or Deezer” according to a translated text of Monin’s interview with France Info.
The proposed tax on streaming services was confirmed by French President Emmanuel Macron last week (December 13). Euronews reports that the proposed tax will fund investment in the Centre National de la Musique (CNM), created in 2020 to support stakeholders across the music sector.
At the time, Bargeton argued that France’s streaming market is lagging compared to other Western countries like the US and the UK and Scandinavian countries. France is currently the sixth largest recorded music market in the world with €920 million in revenue from recorded music in 2022, up 6.4% from a year earlier, according to data from the IFPI.
The proposal was first approved in November by a vote in the Senate, ahead of the 2024 budget.
The exact terms of the French tax on streaming have not yet been revealed by the Ministry of Culture.
Spotify’s Monin said that while the company has the means to absorb the taxes, Spotify is “in a fragile financial balance.” The company recently turned a profit for the first time in more than a year last quarter.
“The adoption of this tax is really a blow to the music sector, to innovation and to European independent platforms like Spotify or Deezer.”
Antoine Monin, Spotify
“Honestly, Spotify will have the means to absorb this tax, but Spotify will disinvest in France and will invest in other markets. France does not encourage innovation and investment,” said Monin.
Monin said Spotify France pays 70% of its revenue to music rightsholders, a 20% VAT, a 3% tax on digital services, a 5% tax on video services, “and now a streaming tax at 1.75%. How do you expect us to be able to operate in a market like France?”
Monin added that “France will no longer be a priority for Spotify.”
While Monin clarified that no decision has been made regarding potential price increases for users, he said that if an adjustment were necessary, it could result in a 10% increase in subscription prices. Monin proposed a more comprehensive contribution from the industry to finance the CNM, encompassing various revenue streams such as vinyl and CD sales, along with radio.
“With a flat rate for all music streaming companies, it is absolutely clear that it will have a worse impact for independent European music streaming companies like Deezer and Spotify, while the American tech giants can easily absorb the tax.”
Jeronimo Folgueira, Deezer
Spotify rival Deezer also expressed its dissatisfaction with the proposal, with Deezer CEO Jeronimo Folgueira saying in a statement on Monday (December 18): “I am incredibly disappointed about the introduction of this tax, and although the intentions are good, this is the worst possible outcome that will backfire and have negative consequences for the entire music industry in France.
“With a flat rate for all music streaming companies, it is absolutely clear that it will have a worse impact for independent European music streaming companies like Deezer and Spotify, while the American tech giants can easily absorb the tax, and as result harming European and French tech sovereignty.”
Folgueira stressed that Deezer “will now be forced to take measures to safeguard the business and will have less money to spend on supporting French artists and making sure music consumption in France grows”.
He added: “We are a French tech company promoting more local music than any other platform and given the majority of our revenue comes from France, we will be disproportionately affected. We will now be forced to take measures to safeguard the business and will have less money to spend on supporting French artists and making sure music consumption in France grows.
“It’s a shame that it has come to this, especially since there was industry consensus for a voluntary contribution, except from Amazon Music. Now we are left with a tax that unfairly punishes a French company that has always been supportive of the local music industry.
“Finally, music streaming has become one of the most important cultural products for millions of people across France, including in the most remote corners of the country, and all of them will be unfairly punished by this tax.”
Last week, Spotify reconsidered its withdrawal from Uruguay following the government’s clarification on recent alterations to music copyright legislation.
The streaming company had initially considered exiting Uruguay in response to proposed changes in copyright laws that it says could have compelled it to pay twice for the same music.
Music Business Worldwide