Price increase ruling Price clause for Spotify subscriptions invalid
9/9/2022, 3:00 p.m
Consumers are currently affected by price increases in almost all areas. It is therefore all the more important to make it clear to the provider that they must comply with the legal requirements. The Federation of German Consumer Organizations did this in the case of the Spotify music streaming service.
Life is getting drastically more expensive in parts. Consumers are almost helpless in the face of this. In most cases, the price increases can only be cushioned by cutting back on consumption. But that in turn is bad for the country’s economic development and thus jeopardizes jobs.
But apart from that, consumers don’t have to accept everything. For example, the price adjustment clause in the subscription terms of the music streaming service Spotify is inadmissible. This was decided by the Regional Court (LG) Berlin (Az.: 23 U 112/22) after a lawsuit by the Federal Association of Consumer Organizations (VZBV).
The Sweden-based company reserved the right in its terms of service to increase subscription fees and other prices to compensate for “the increased overall costs” of providing the streaming services. The total costs included, for example, production and license costs, personnel, administration and financing costs as well as taxes, fees and other levies. The clause did not provide for a price reduction as a result of reduced costs.
Cost reductions must also be passed on
The LG agreed with the VZBV that customers were disadvantaged by the unbalanced clause of the streaming service. According to the case law of the Federal Court of Justice, cost reductions in the event of price changes should be taken into account as well as cost increases and these should be passed on to customers according to the same standards. The Spotify clause does not do justice to this. There is no obligation to pass on cost reductions. This means that the chances and risks of cost changes are unequally distributed between companies and customers.
The company’s argument that costs in the market for streaming services would only increase anyway is not correct. Also, the company’s costs depended in part on cost elements that may decrease. A clear example is the temporary reduction in sales tax in the second half of 2020. Spotify had passed the tax reduction on to customers. According to the wording of the clause, the company would not have been obliged to do so.
In addition, the LG made it clear that the customer’s right to terminate the contract at any time does not compensate for the disadvantage caused by the price change clause. Spotify has appealed the decision – the judgment is therefore not yet final.