Spotify Tax Phobia VS French Government
Macron pleads for a ‘voluntary contribution’ to keep the festivals alive.
France’s new music streaming law has hit a sour note for Spotify, leading the company to exit its participation in two major French music festivals.
What is the deal breaker?
Taxes, of course.
The tax, announced on December 13 after a Senate vote, prompted Spotify to withdraw support from the Francofolies and the Printemps de Bourges, starting in 2024, as reported by Euronews.
Despite Spotify’s earlier campaign for a voluntary contribution, President Emmanuel Macron decided to go ahead with a new tax system:
A 1.2% fee based on the revenue generated in France*.
*Smaller platforms making less than €20 million are exempt from this tax.
As a response, Spotify's VP shared concerns regarding the innovation and growth in the French market, categorising the tax as ‘inequitable, unjust, and disproportionate.’
“This is a real blow to innovation, and to the growth prospects of recorded music in France. We are evaluating the follow-up to be given to the implementation of this inequitable, unjust and disproportionate measure.”
Luckily, organisations against the tax offered an alternative:
Major companies like Apple, Deezer, Meta, Spotify, YouTube, and TikTok joined forces to gather a ‘voluntary contribution’ exceeding “more than 14 million euros” by 2025, supporting the national musical scene while bypassing the necessity for a mandatory tax.
Spotify rationale against French tax measures.
According to the General Manager of Spotify France, Antoine Morin, this tax ‘plays into the hands of the GAFA’, whereas Deezer and Spotify are European and independent companies:
We pay 70% of our revenues to music rights holders. Add to that a 20% VAT, a 3% tax on digital services, a 5% tax on video services, and now a 1.75% streaming tax. How do you expect us to operate in a market like France?”
— Antoine Monin, General Manager of Spotify France on FranceInfo
Indeed, Spotify, launched in 2006, is not yet profitable. Unlike its competitors (YouTube, Apple, or Amazon), the company can’t absorb these taxes (yet).
‘Spotify made a profit for the first time in the last quarter [65 million euros], but for now, we are in a delicate financial balance.’
— Antoine Monin, General Manager of Spotify France on FranceInfo
As the tax dispute continues, Spotify has hinted at more announcements in 2024, threatening to disinvest the French market.
