Thursday 01 December 2016 2:03 pm

Spotify, one of Europe’s top tech startups, could become profitable as early as next year

Spotify, one of Europe's most valuable tech startups, could start being profitable as early as next year, a board member who was one of the music streaming service's first investors told Reuters.

Despite being the global leader of the music streaming industry, Spotify has reported steep losses since its creation in 2008 by Swedish founders Daniel Ek and Martin Lorentzon.

"Up until now, I think it's been growth, growth growth," said Par-Jorgen Parson, a general partner at venture capital firm Northzone, to Reuters.

"Maybe profitability will start to become a priority too." When asked if that profitability could come as early as next year, Parson said: "Absolutely, yes."

Spotify reported an operating loss of €184.5m (£154.9m) in 2015, up from 165.1m in 2014. The company's profits largely depend on royalty licensing deals it makes with large music labels.

Spotify is considered a top candidate to go public on the Nasdaq in 2017.

The streaming service has a value of $8bn (£6.3bn) based on a funding round last year, which would make it the biggest tech listing in Europe since the market launch of German e-commerce investor Rocket Internet.

"As an investor – and I've been in the company now for almost 10 years – we're looking forward to an IPO at some point in time," said the New York-based Parson.

A listing by Spotify would benefit Europe's tech industry, where companies tend to sell early to Silicon Valley or China.

Some analysts have said Spotify's business model is flawed, but the company is nearing a tipping point to having greater leverage in negotiations with its 40 million paid users.