The online music streaming service Spotify, which has more than two million users in Europe, is recruiting staff for an imminent assault on the US music scene despite admitting that it is struggling to hit its target of making a profit by the end of the year.

Founded by two Swedish entrepreneurs, Spotify provides an online jukebox allowing users to listen to a library of more than six million tracks, funded either by regular advertising breaks or by a monthly subscription for uninterrupted listening. The model has proved phenomenally popular since its launch in October and has been hailed as a viable alternative to Apple's iTunes.

On a visit to New York, Spotify's co-founder, Daniel Ek, told the Observer that he was hiring employees and seeking office space for a launch in the US in the "third or fourth quarter". But he revealed that Spotify may not meet its often-stated goal of making a profit by the end of 2009.

"We still hope to do that, but given the recession and so on, it might take a little longer," said Ek. "It may be next year."

The 26-year-old entrepreneur has been in negotiations with record labels about extending Spotify's European licensing deals to stream music in the US market. He insisted that he remains confident about the company's financial progress: "Why would I go to the US and try to get more extensive licences if I had trouble covering our costs in Europe?"

Based in Stockholm but with offices in London, Spotify is viewed in internet circles as one of the most promising start-ups of recent years. The site is adding 50,000 registered users per day, with members spending an average of an hour a day on the service. On the day of Michael Jackson's death, Spotify users in Britain accessed his songs more than 10 million times in 20 hours.

Ek said he was already familiar with most US music publishers because Spotify has negotiated with them over European copyright: "Most of our deals are done from the US anyway so I speak to these people on a weekly basis - I know them, I know their numbers, I know their wives' names."

In contrast to the pay-per-download model favoured by iTunes or Amazon's music store, Spotify supports itself through a choice of radio-style commercial breaks or a monthly fee - set at £9.99 in Britain - for an enhanced service with no advertising, higher quality audio and exclusive content.

Spotify's advertisers in Europe include Nike, Ikea, H&M and Sky Television. But the company will face competition in the US from rivals such as Pandora, an online personalised radio service; LaLa, a California-based online music store; and Imeem, a social networking site specialising in sharing music and video.

Spotify will shortly launch a mobile phone version of its service - a move viewed as crucial by analysts. Mike McGuire, a digital music expert at research firm Gartner, said: "The mobile element will be an important one to be adding fairly quickly. We've seen some decent uptake in music from customers with smart phones."

Expansion in the US will be through word-of-mouth and viral marketing. Ek is hoping that social networks such as Twitter will spread the word about Spotify among Americans: "Don't expect a fancy marketing campaign. The money we could have spent on marketing is better spent on developing a better product."

Unusually, Spotify sells its own advertising rather than using an agency to pull in customers. Ek maintains that Spotify's strength is its ability to match suitable advertisers closely with the age, location and music tastes of its customers.

"We know for a fact that music history and demographic history can tell you a lot about brand preferences," he said.

The site has a "click through" rate of about 0.5% of users who alight on advertisements, although when audio ads are matched with display promotions, this rises to 1% - higher than most websites.

Ek and his business partner, Martin Lorentzon, who founded e-marketing company TradeDoubler, have invested €8m (£6.9m) of their own money in Spotify. Ek was tight-lipped on recent reports that Spotify has put a £200m valuation on itself in a capital-raising effort.

"If someone's willing to pay £200m for it, that's what it's worth. But would I sell the business for £200m? The answer is no," said Ek. "If it's done right, this could be a billion-dollar company."