[julien040]

France did something like that last month. To support the "Centre national de la musique", a new 1.2% tax was added on digital music streaming services. But rather than absorbing the cost, Spotify just raised its subscription cost. In the end, the government just taxes its citizens more instead of getting a bigger share of revenue from these companies.

https://newsroom.spotify.com/2024-03-07/spotify-to-adjust-it...

[gbanfalvi]

That’s not necessarily always true. Spotify may very well pass costs on _right now_, but it may choose to lower its rates if it sees that enough people start unsubscribing.

Companies are constantly adjusting subscriber count vs revenue per subscriber and will charge the absolute maximum they can get away with. Doesn’t make sense not to as a profit-driven company.

[bravetraveler]

We're decades in on Netflix specifically ratcheting their prices like clockwork. One may say inflation, doubt - they adjust more often than anyone.

It overwhelmingly goes in one direction. A new sucker is born every day

The network effect of this is "the money machine must grow/demands more". They don't have to do this - everyone knows how well-paid their people are. It's a system of systems.

There's an academic understanding and then the practical one. Everyone stands to benefit from a Boogeyman

[foogazi]

> They don't have to do this

What is the economist term for (not) leaving money on the table? Revenue maximization?

Netflix has it both ways:

- Raises prices on its current customers - Sells ad space on its streams, devaluing the experience

[bravetraveler]

I won't pretend to be educated on this, but I'd say 'Revenue maximization' works. Businesses are there to make money, I get it.

I'm really getting at this: we as people have a tendency to optimize things beyond their optimal point. We can't leave well enough alone.

In the time it's taken me to post twice about how I've quit Netflix, I made enough to pay for the subscription. The cost isn't the point - I stopped because of the action, not the result.

I'm not really complaining, though. My job - SRE - basically depends on this tendency in others.

To your point, the experience has been devalued.

The content isn't as good as it once was IMO. The price continuously raised, the terms kept changing, and the proposition stopped making sense for me.

[namlem]

A lot of the productions themselves have to borrow money to get made. Higher interest rates means shows and movies cost more to produce.

[kbelder]

Right, it generally settles into a new optimum where customers are paying a little more, the company is earning a little less, and the state gets its so-well-deserved cut.

[fmobus]

Not sure why you are getting downvotes, you are absolutely right.

It's a positive outcome of economic science that procuders can't fully pass taxes to consumers. There's always some sort of division of the overall dead weight loss, and it's always proportional to that market's conditions (competition, market share, elasticity, etc). If a producer decides to try to fully pass the price, it's because they believe their costumers are inelastic or that competition will not be able to undercut them.

To put it another way: if companies were fully passing tax hikes onto the customer... then companies wouldn't be complaining about taxes!

[glimshe]

Companies will make less money as a result of the tax, but the consumer will also be paying for it through higher prices. Just because companies end paying a part of the tax, it doesn't mean that the consumer isn't paying.

Additionally, fewer people will enjoy the service which is bad for everyone. Arguably people will get to enjoy whatever the tax is funding, but will they want to?

[fmobus]

As I said:

> There's always some sort of division of the overall dead weight loss

My point is, a lot of people seem to think that the costumer _exclusively_ bears the cost of a tax hike. It is simply not true, positively so.

> Just because companies end paying a part of the tax, it doesn't mean that the consumer isn't paying.

That's tautological, unless there is a third entity that could be paying the remaining part of the tax.

> Additionally, fewer people will enjoy the service which is bad for everyone. Arguably people will get to enjoy whatever the tax is funding, but will they want to?

That's normative. I will not discuss preferences.

[chrisandchris]

That will be a first, a company lowering its subscription prices.

I mean, Microsoft raised their prices last year substantually. And they had a "record year 2023".

[pleb_nz]

Not very often companies will absorb the costs IME. Sometimes though it’s delayed or through some other side effect.