Could the introduction of a 1.75% tax on music streaming platform sales, proposed to support the industry, lead to an increase in subscription costs for these services?
Although music streaming platforms like Spotify, deezer and Apple Music are popular with many listeners, their music production business model is not profitable enough. To solve this problem, the government is considering a plan similar to the CNC for cinema by imposing a 1.75% tax on music streaming service sales. This tax would also apply to YouTube and TikTok, although they are free. However, it is possible that this tax will result in an increase in subscription prices.
20 million dollars extra thanks to 1.75% tax
The National Music Center (CNM) must follow an ambitious roadmap that includes developing French creations internationally and ensuring cultural diversity. However, the financial resources are lacking. The government had previously fed the CNM coffers erratically during the health crisis, but finding long-term funding is necessary.
Currently, the CNM is primarily funded by a 3.5 percent tax on live tickets with one-time contributions from the state. Two-thirds of that tax goes to entertainment professionals, while one-third feeds the industry’s common pot.
The senator proposing a change in how the tax is distributed is proposing that half the money from that tax go to the common pot. However, this solution would not be enough to fill the coffers. To avoid new government funding, the senator recommends taking nearly 1.75% of sales from Deezer, Spotify, Apple Music, YouTube and TikTok to fund the CNM instead. This proposal would bring about 20 million additional dollars for the CNM.
Streaming subscription costs going up?
Despite the various measures taken, a report by Julien Bargeton indicates that the CNM is facing a deficit of between 30 and 40 million dollars. To remedy the situation, the 1.75 percent tax on the sales of music streaming platforms should bring in 20 million dollars.
However, it’s hard to imagine that consumers won’t face an increase in the subscription price. Music streaming platforms will have the power to decide whether or not to raise their prices. This tax will be revised in 2024 under the Finance Act.
Overall, the CNM lacks the financial resources to operate effectively and increasing the subscription price for consumers could be a possible solution. The final decision will be made by the music streaming platforms and the tax will be reviewed when the funding bill is drafted in 2024.
The coming months will therefore be crucial for the future of CNM and music streaming platforms.
