In its latest financial statements, Spotify reported that it had 747 million euros ($1.1 billion) in revenue last year. That was up about 74 per cent from 2012, the privately held company said in filings made public in Europe on Tuesday.

Spotify had $US80 million ($94 million) in net losses during 2013, down from its $US115 million loss in 2012. The company has said that it pays about 70 per cent of its revenue to record companies and music publishers.

By the end of 2013 it had 958 employees, but that number is already obsolete. Last week, Martin Lorentzon, one of Spotify's co-founders, said at a trade conference that its head count had grown to 1500 and would soon be "up to 2000 people."

The finances show how quickly streaming music has spread. Started in Sweden in 2008, Spotify came to the United States three years later and is now available in 58 markets around the world. (Some 32 of them opened in 2013, the company reported.) It makes millions of songs available by subscription - usually at around $US10 a month - or free with advertising.

Streaming's growth has coincided with sharp drops in sales of CDs and downloads around the world, making services like Spotify the music industry's biggest hope for new revenue. According to the International Federation of the Phonographic Industry, sales of music on physical formats like CDs dropped nearly 12 per cent in 2013, and the 4.3 per cent growth for digital sales that year was driven by a 51 per cent increase in subscription outlets.

More people listen to Spotify free than pay for it: Of its 36 million active users at the end of 2013, the company said, 8 million of them paid. (This month, Daniel Ek, Spotify's other founder, said it had since grown to 50 million users, including 12.5 million paying subscribers.)

But subscriptions make up the vast majority of the company's revenue. According to its statement, $US897 million, or about 91 per cent of its sales, came from subscriptions, and only $US90 million from advertising. As a result, the royalty rates it pays to music companies for the free streams are substantially lower than those for the paid ones.

That differential helps illustrate a wave of criticism the company has received lately from artists, most prominently Taylor Swift. This month, Swift removed her entire catalog from Spotify, apparently because the service would not make her music available only to paying users.

In Spotify's defense, Ek said that the company had paid a total of $US2 billion in music royalties since it began in 2008, and argued that "our free service drives our paid service." But artists and record companies have become increasingly frustrated with the amount of free music being made available to listeners, and as streaming music has grown more popular, it has also attracted a range of outlets that compete for listeners, like Rhapsody, Rdio and Google Play Music.

This month, YouTube, which is owned by Google, also introduced a paid subscription tier for music, and Apple, which this year paid $US3 billion for Beats, is expected to reintroduce the Beats Music service next year with changes that could make it a major competitor against Spotify.

Spotify's future plans, and the possibility of a sale or initial public offering, have been the subject of constant speculation in the music industry. It has raised more than $US500 million in investment, and in its most recent round of financing late last year was valued at $US4 billion. A company spokesman declined to comment on its plans.