Spotify, Apple Music, and Amazon Music Sue Over Canada’s ‘Unsustainable’ 5% Streaming Tax, Warn of ‘Economic Repercussions’

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Downtown Ottawa, Ontario, Canada. Photo Credit: Harleyd613

Spotify, Apple Music, and Amazon Music are officially suing over Canada’s “unsustainable” 5% streaming tax, which, among other things, may “violate trade obligations.”

The services, which are the three largest in the U.S. by market share, announced the legal actions via their Digital Media Association (DIMA) trade organization. Boasting a fresh website, said organization has evidently embraced an all-caps acronym, doing away with the lowercase “i” in most parts of the relevant release.

Shifting from this background detail and to the streaming tax, the Canadian government has amended its Broadcasting Act with a decidedly robust Online Streaming Act.

In the interest of brevity, the multifaceted law, as its title suggests, describes all manner of requirements to be enforced in the streaming space (music as well as video) by the Canadian Radio-television and Telecommunications Commission (CRTC) during an ongoing implementation process.

Ostensibly designed to render “Canadian stories and music widely available to Canadians in the digital age,” these all-encompassing regulations differ for non-Canadian video and music services. But the result is the same for both platform types, which the CRTC last month hit with a 5% levy on revenue effective September 1st, 2024.

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The official breakdown of where exactly funds will go under Canada’s 5% music streaming service tax.

Unsurprisingly, that isn’t sitting right with leading music streaming players, while video platforms including Netflix have launched related legal challenges of their own.

On the music side, with a comments period having evidently failed to bring about material changes, DIMA head Graham Davies confirmed in a statement that Spotify, Apple Music, and Amazon Music are targeting the measure in the Federal Court of Appeal.

“The approach taken is backward-looking and bad public policy from the current Government of Canada,” Davies indicated in part, “and fails to acknowledge streaming’s existing contributions to music production.

“Imposing a 5% levy on streaming services is unsustainable, bad for consumers, and fails to follow the policy directive by Canadian Heritage and the Online Streaming Act,” proceeded the former UK Music director.

And from there, Davies rather directly urged the CRTC and the Canadian government to rethink the law and account for “the unintended consequences it is creating.”

While time will reveal all those consequences, it stands to reason that Spotify, Apple Music, and Amazon Music could bump their prices in Canada due to the levy.

Spotify didn’t hesitate to do so in France following the implementation of a separate streaming tax, and Canada-based subscribers pay relatively little for music at present. That refers specifically to CA$10.99 (just over $8) monthly for Spotify, Apple Music, and Amazon Music, though Prime members pay only $9.99/CA$7.32 monthly.

In other words, there appears to be pricing wiggle room in the nation of about 40 million, which means consumers might soon face heightened on-demand streaming charges.