The French Ministry of Culture has announced a tax on the earnings made by music streaming platforms to promote the growth of the French music industry.
The new streaming tax will finance the National Center for Music (CNM). This new tax has not come without criticism from leading streaming platforms: Deezer and Spotify.
France Streaming Tax Faces Criticism
It is not the first time France has announced taxation measures for the entertainment industry to fund government departments. The National Centre of Cinematography (CNC) has taxed movie theater ticket prices since 1993 to promote the audio-visual industry.
The exact nature of the tax on the streaming platforms has not been announced, nor has the exact revenue it will raise. The tax is part of the 2024 budget bill.
It was first suggested earlier this year when Senator Julien Bargeton of the Renaissance Party presented a report proposing a 1.75% tax on the earnings made by streaming platforms. The proposal stated that the tax applies to the streaming platforms with an expected annual yield of around €20 million.
The tax is already attracting criticism from industry players. While speaking to FranceInfo, the French managing director for Spotify, Antoine Monin, opined that the tax was unfair because it only applied to streaming sales, not physical sales or the ones made on radio.
He further opined that the taxes imposed by the French government would hamper the competitiveness of leading European streaming platforms like Spotify and Deezer against their US rivals such as Amazon Music and Apple Music.
The tax comes as Spotify faces some financial challenges. Earlier this month, Spotify’s CEO, Daniel Ek, noted that the streaming platform would trim its global headcount by 17% across the company, totaling around 1,500 layoffs. Therefore, this tax will add another dent to the revenues.
Streaming Tax Will Hurt Tech Sovereignty in Europe
Deezer’s CEO, Jeronimo Folgueira, also announced that this tax would affect the “tech sovereignty in Europe. While speaking to Brussels Signal, Folgueira said he was disappointed with the introduction of this tax.
France’s decision to impose a music-streaming tax on digital platforms will hurt the “tech sovereignty” of all of Europe, a French media giant Deezer’s CEO @jfolgueira tells Brussels Signal. https://t.co/6T2NBisoaO
— Brussels Signal (@brusselssignal) December 15, 2023
“We are a French tech company promoting more local music than any other platform,” Folgueira said.
We will now be forced to take measures to safeguard the business and will have less money to spend on supporting French artists and making sure music consumption in France grows.
Folgueira adds that this new tax will benefit US Big Tech firms in absorbing costs. As such, implementing this tax would likely backfire in France and Europe.
The flat rate imposed on all music streaming companies also makes it clear that this tax will have a worse effect on the independent European music-streaming platforms.
Tech Giants Collaborate On a Compromise
As the government is imposing this tax to support the National Center for Music, several tech giants have teamed up to make a voluntary contribution to supporting the operations of NCM. This collaboration will have an expected payout of over €14 million in 2025.
The tech giants also said they would support NCM in more market developments. The voluntary contribution is expected to deliver more value than the Senate’s tax on streaming platforms. It will also create equality in the industry.
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