Spotify Facing Price Hikes in France
Spotify is promising that its French subscribers will soon pay the highest streaming prices in the entire EU as part of its battle against the new French streaming levy, which will also apply to rivals such as Deezer, Apple Music, and YouTube Music. The levy came into effect in January and is designed to help up-and-coming musicians and the French music sector generally.
So far Spotify is the only one of the best music streaming services promising a price hike, and so far it hasn't said how much the hike will be. But given the tone of its communications so far, it seems highly unlikely that we're talking a few cents. According to Spotify's blog post, the new 1.2% levy – roughly 13 cents on Spotify's €11.99 per month – is “a massive amount” that Spotify “can't absorb”.
Spotify has already stopped funding the French music festivals it was sponsoring along with cutting the cash it gave to artist marketing initiatives in the country.
The total revenues per year from the levy are expected to be in the region of €15 million / $16 million from all streamers combined; as the market leader in France, Spotify would pay more than its rivals.
Streamers vs France: it's war
If you were feeling cynical, you might wonder if this is really about the money. After all, the levy's a fraction of the sums Spotify's loss-making podcasting division pays the likes of Joe Rogan, which is one reason the firm is losing money despite growing subscriber numbers and growing revenues. And it's a drop in the ocean compared to the amount of money CEO Daniel Ek made from selling Spotify shares over the last 12 months.
The expected revenue of €15 million is only slightly higher than the €14 million all the streamers – bar Amazon – offered to pay as an annual voluntary contribution to the same organization the levy will help fund, the Centre National de la Musique. But of course, a voluntary contribution can be stopped whenever the participants don't feel like volunteering anymore.
If as seems likely Spotify will raise its prices by more than the levy to try and generate ill-feeling among consumers towards the French authorities, other streamers may follow suit. Deezer's CEO Jeronimo Folgueira called the levy “the worst possible outcome of all the different scenarios that we could have ended up with”, and as we've seen with streaming in other markets there does tend to be a domino effect. Folgueira has already said that it was possible that Deezer would pass on the extra costs “along the value chain”.
It seems unlikely that a small price hike would result in a cover version of the French Revolution, or that Spotify could hike its prices high enough to engender enough anger at the French government without shooting itself in the foot. But perhaps a longer game is being played here. If the prices go up in France and there isn't significant subscriber churn as a result, it'll strongly suggest that streaming prices can go up in other markets too.
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