Spotify Raising Prices in Canada While Challenging Proposed ‘Streaming Tax’
Written by djfrosty on October 3, 2024
Spotify is reportedly raising prices for subscribers in Canada.
The move comes amidst the implementation of the Online Streaming Act, which sees the Canadian Radio-television and Telecommunications Commission (CRTC) requiring major foreign streamers — those with revenues over $25 million — to pay 5% of revenues as base contributions into funds for Canadian content.
The price increase also comes as the streaming giant raises costs in markets beyond Canada. In July, Spotify increased prices in the U.S. from $11 monthly for individuals to $12. That increase follows a previous hike in 2023, which affected both the U.S. and Canada, and marked the app’s first price increase since 2011.
In a statement to Billboard Canada, a Spotify spokesperson does not explicitly link the increase to the “streaming tax” but does indicate the company is part of a legal challenge against the CRTC. Spotify joined Amazon and Apple filed legal challenges against the CRTC this summer, following the June announcement of the regulation.
“As we continue to innovate and invest in providing our listeners with greater value than ever before, we occasionally update our prices,” a spokesperson for Spotify tells Billboard Canada. “We may also adjust our prices to reflect local macroeconomic factors and meet market demands while offering an unparalleled service. We, along with a number of others, have filed a legal challenge against the CRTC streaming tax in Canada, and so will not be commenting further publicly at this time.”
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The Online Streaming Act was implemented this year after extensive consultations last fall. The base contributions from major streamers are expected to generate 200 million in funds for Canadian content, with the contributions directed toward “areas of immediate need,” including funding bodies FACTOR and Musicaction, as well as the Indigenous Music Office.
Music rights-holders have called for increases to streaming prices, which haven’t matched inflation over the last decade. Spotify has been re-evaluating its prices and royalty models as it invests in audiobooks, making changes to its revenue share payouts which have de-monetized songs receiving fewer than 1000 plays per year.
The company has also made adjustments to its presence in Canada, laying off Nathan Wiszniak, Head of Artist & Label Partnerships at Spotify Canada, during a round of cuts last December. The company has since hired Elizabeth Phipps as Label Partnerships Lead, Canada.
During the consultations for the Online Streaming Act last fall, Spotify’s Olivia Regnier provided testimony before the government that suggested they might make changes to how Spotify operates in Canada if forced to pay.
“If asked to make a burdensome contribution, irrespective of our existing investments, Spotify will need to make financial decisions to sustainably run our business,” said Regnier. “Additional costs could require us to cut expenses, including [reducing] our resources for editorial, partnership, and promotional programs in Canada; reduce resources currently going back to the music ecosystem; or force us to raise prices for Canadian consumers,” she continued.
When the decision was announced in in June, organizations like the Motion Picture Association — Canada, which represents platforms like Netflix and Disney +, expressed dismay.
Others, like the Canadian Independent Music Association (CIMA), welcomed the announcement. “As we look towards the future of music in Canada, this decision lays the groundwork for a dynamic partnership with digital platforms where Canadian talent can thrive both domestically and internationally,” said CIMA President Andrew Cash.
Spotify has more than 600 million users and reported 3.6 billion euros in first quarter global revenue this year.
This article was originally published by Billboard Canada.