In 2024, the government will introduce a streaming tax levied on the turnover of music services. A tax to finance the National Music Center… which could have the effect of favoring the American giants. At least that’s the argument defended by Spotify.
“A monumental strategic error which goes against the challenges of European economic, cultural and technological sovereignty. »
On France Info on December 14, the general director of Spotify France, Antoine Monin, was extremely annoyed by the new streaming tax announced by the Ministry of Culture. In addition to private copying, the government will impose a tax on music streaming services in 2024, which should represent between 1.5 and 1.75% of their turnover. “The government has given in to pressure from the performing arts lobby and certain parliamentarians” adds the head of Spotify.
Spotify threatens to step back from France
In France, Spotify and Deezer together represent 78% of the streaming market (44% for Spotify and 34% for Deezer). The particularity of these two actors: they are European. Spotify comes from Sweden, Deezer comes from France. If Spotify has become the world number 1 despite competition from web giants (Apple, Google, Amazon, etc.), Deezer especially benefits from very good form at home.
The problem with Spotify and Deezer is that their turnover comes mainly, if not exclusively, from streaming. A tax of 1.75% would represent a significant part of their income, with the risk of causing a large financial loss. “We pay 70% of our revenue to music rights holders, you add to that a VAT at 20%, a tax on digital services at 3%, a tax on video services at 5% and now a streaming tax at 1.75%. How do you expect us to be able to operate in a market like France? » says the boss of Spotify.
Is he right ? It is true that competitors of Spotify and Deezer will be less impacted by this problem. If Apple Music has to pay 1.75% of its French turnover to the government, Apple will always be able to absorb this loss with its incredible war chest, which comes from the sale of iPhones or Macs. In the case of Spotify and Deezer, it would really be a question of lost money, which would weigh on the balance sheet.
“ Spotify will have the means to absorb this tax, but Spotify will divest from France and invest in other markets. France does not encourage innovation and investment » continues the general manager of Spotify France, who is not the first to make this type of statement in a context of political negotiation. The boss of Spotify France says he fears that his company’s headquarters will prefer to invest in London rather than Paris, because of the wrong message sent. In the case of Deezer, which does the majority of its business in France, the problem could be even bigger.
Will subscription prices increase?
During the summer of 2023, most streaming services increased their prices. 10.99 euros has become the new 9.99 euros, to face new market challenges.
In 2024, will Spotify, Deezer and Apple Music cost more in France? The platforms could be tempted to increase prices only in France, to make their customers pay the tax. The risk for a “small” player like Deezer would be to have to increase prices, while others would not have this problem. It turns out that in August, when the tax was still a project, Deezer threatened to increase prices if it was implemented.
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