The announcement came as a bombshell in the French media landscape. On December 13, 2023, the French government announced its intention to introduce a “streaming tax”. Platforms were quick to react with resentment, anger, and revenge. But what is the streaming tax, and what are its impacts? And can it be duplicated elsewhere?
Streaming tax: what is it?
The tax is based on a simple principle. In 2024, the French government intends to tax companies operating in the streaming sector whose sales exceed 20 million euros. The amount of the tax is set at 1.2% of sales – as opposed to the previously announced 1.75% – a substantial sum. Music streaming platforms, such as Spotify, are, of course, affected. In France, the world’s leading platform has achieved more than twice 20 million sales in 2022.
This tax is supposed to finance the music sector in France via the Centre National de la Musique (CNM), created in 2020. It would give the CNM complete competence and solid financial resources to assist all players in the French music industry.
The French government has announced that the tax is expected to raise 15 million euros.
The consequences of the streaming tax
Following the announcement, streaming platforms joined forces to denounce what they consider a “production tax.” Apple, Meta, TikTok, YouTube, Deezer, and Spotify had come together a few months earlier to work on a collective solution based on the principle of voluntary contribution. In a press release, these platforms announced that they had agreed to raise over 14 million euros by 2025.
But the French government chose not to pursue this course, preferring to confirm the streaming tax announced nearly six months ago. Streaming platforms are going even further, claiming this tax is “unfair, unjust, and disproportionate.” Inevitably, consumers are likely to bear the brunt of this tax. Spotify has already threatened to raise its monthly prices to absorb the shortfall.
Many streaming platforms have already increased their monthly subscription prices. We explained the reasons for this in this article. The days of more or less free or low-cost music listening are now officially over.
Spotify retaliates in France
Spotify was quick to react in France. Antoine Monin, Managing Director of Spotify France, announced that the company would disinvest in France as the country does not encourage innovation and investment. He also believes the tax is unfair because it only concerns music streaming, not radio or physical sales of records and vinyl. If a tax is put in place, then it should affect all music players in France, asserts Antoine Manon.
The Swedish giant is a major player and partner in some music festivals it subsidizes. Following the announcement of the streaming tax, Spotify withdrew its support for Printemps de Bourges and Francofolies de La Rochelle, two of France’s biggest festivals.
A way of putting pressure on the government?
What’s next?
With France serving as a testing ground, other governments may also introduce streaming taxes. In a context where artists’ remuneration is increasingly on the table and where streaming is presented as a system as powerful as it is unequal, we may be on the verge of significant upheavals.
Torn between audience expectations, the – legitimate – demands of artists, and government pressure, Spotify, Apple Music, TIDAL, YouTube Music, Amazon Music, Deezer, and the rest are finding ways to perpetuate their model. Against increasing competition between the various services, these looming taxes could potentially jeopardize their economic ambitions.
And in the end, consumers will bear the brunt of these difficulties. Soundiiz will inform you of further developments of this “streaming tax” and its consequences!
