Spotify is angry with the French government and is taking it out on users

Spotify said on Thursday it would raise its subscription prices in France in response to a new tax designed to support the country’s music industry. The company wrote open letter condemning the tax, which the French government passed at the end of 2023. The streaming service has not yet said how high the price increase will be, other than teasing, “French consumers will now pay the highest subscriptions in the entire European Union.”

CNM tax in France imposes tax on music services that earn 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 the new 1.2 percent fee on all streaming revenue generated domestically. Social media companies that license music, including TikTok and Facebook, are also subject to the tax. The fees will go to the nation Center for National Music (CNM), a public institution supporting and promoting the French music industry.

Spotify’s initial answer in December was yes pull financial support from French music festivals Francofolie de la Rochelle and Printemps de Bourges. The company endangered to withdraw his services from Uruguay when a similar tax was announced there, but eventually give way when the Uruguayan government said streaming services would not cover any costs.

Spotify has made no such threats to leave France, presumably because the country is far more important to the bottom line. Instead, he is campaigning for public pressure, including the music service, describing the tax as an unnecessary grab of government money that only partially funds the music industry.

“This tax will generate approximately €15 million, when CNM’s administrative budget (office fees, staff, capital expenditure, media monitoring or professional training, etc.) amounts to €20.2 million,” the company wrote in the public a letter. “Our concern is that probably less than half of its total budget of €146.9 million will find its way into effectively supporting music.”

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

Spotify’s revenue grew up 16 percent year-on-year to 3.7 billion euros ($4.05 billion) in the fourth quarter of 2023, which was described as a “very strong quarter.” Its executive director sold $57.5 million in stock in February, after selling $64 million in stock in October 2023.

“As we’ve long said, we simply cannot absorb additional taxes,” Spotify wrote. “Even after taking the difficult decision to cut our artist marketing budget and support for French music festivals – which is a key means for Spotify to continue to bring hundreds of millions of euros to the music industry – this still continues to hamper our ability to operate in France. Accordingly, in the coming weeks and months, we will need to make changes to our pricing plan in France.”

Spotify says French subscribers will learn more about the price hike “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 the previous version stated).