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Spotify’s revenue growth might not be enough to save free music tier

Spotify has posted growth in earnings for 2014, despite growing concerns over the sustainability of its free-tier music streaming service.

The Stockholm-based company revealed it managed to draw in some 1 billion Euros in revenue, which translates to around £727 million.

That’s a 45 per cent rise on the previous year’s 747 million Euros turnover, signalling improved uptake in the company’s services.

Unfortunately, the music streaming market leader didn’t manage to turn around a profit, instead posting significant losses.

Through 2014, Spotify operated at a deficit of 165 million Euros – that’s around £120 million.

That’s compared to a smaller operating loss in 2013, which saw the company short on 91 million euros (£66m).

Spotify claims this increased loss is thanks to investments in product development, international expansion, and an increase in staffing.

Related: Apple Beats relaunch: The story so far

The company is expected to face fierce competition in the coming months, with Apple widely tipped to launch its own rival music streaming service.

Spotify looks set to shield itself against the oncoming storm, with rumour-spinners suggesting the company will soon branch out into video streaming.

The company is due to hold an event on May 20 in New York, which is likely to be the venue for Spotify’s big reveal.

Apple’s Beats Music relaunch, meanwhile, is tipped for summer, with most spectators suggesting the company’s announcement to take place at the annual WWDC conference, which runs from June 8 to 12.

Apple is expected to challenge Spotify’s free music offering by obtaining exclusive deals with music artists and labels.

Is Spotify’s free music tier doomed, or can the company maintain its market leader position? Let us know in the comments.

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