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

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Spotify said on Thursday it will raise its subscription prices in France in response to a new tax designed to support the nation’s music industry. The company wrote an open letter denouncing the tax, which France’s government passed in late 2023. The streaming service hasn’t yet said how high the price hike will be, other than teasing, “French users will now pay the highest subscriptions across the European Union.”

France’s CNM tax imposes a levy on music services that earn over 20 million euros ($21.9 million) in the country: Spotify, Apple Music and Deezer. (Apple Music and Deezer have opposed the tax but haven’t announced similar price hikes.) The companies pay the new 1.2 percent charge on all streaming revenue generated in the country. Social media companies licensing music, including TikTok and Facebook, are also subject to the tax. The fees will go to the nation’s Centre National de la Musique (CNM), a public institution supporting and promoting the French music industry.

Spotify’s initial response in December was to pull financial support from French music festivals Francofolies de la Rochelle and Printemps de Bourges. The company threatened to pull its services from Uruguay when a similar tax was announced there but ultimately backed down when the Uruguayan government said streaming services wouldn’t have to cover any costs.

Spotify hasn’t made similar threats to exit France, likely because the country is much more crucial to its bottom line. Instead, it’s waging a public pressure campaign, including the music service painting the tax as an unnecessary government money grab that only partially funds the music industry.

“This tax will generate approximately 15 million euros, when the CNM’s administrative budget (office fees, personnel, capital expenditure, media monitoring or professional training etc.) sits at 20.2 million euros,” the company wrote in the public letter. “Our concern is that possibly less than half of its overall 146.9 million euros budget will find its way toward effectively aiding music.”

Other than listing the CNM’s administrative budget, Spotify didn’t provide any evidence that the fees wouldn’t go toward aiding music.

Spotify’s revenue grew 16 percent year-over-year to €3.7 billion ($4.05 billion) in Q4 2023, in what it described as “a very strong quarter.” Its CEO sold $57.5 million in stock in February, following a $64 million stock sale in October 2023.

“As we have long said, we simply can’t absorb any additional taxes,” Spotify wrote. “Even after making the difficult decision to reduce our artist marketing budget and support of French music festivals — which is an essential vehicle for Spotify to continue to drive hundreds of millions of euros to the music industry — it still continues to impede our ability to operate in France. Accordingly, over the coming weeks and months, we’ll need to make changes to our price 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).

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