Streaming music service Spotify has added more than 1m active users in the UK in the last four months, as it tries to overtake Apple's iTunes as the biggest digital music service in Europe.

"Some of our partners are saying Spotify is now generating more revenue each month across Continental Europe than iTunes," Spotify's head of label relations in Europe, Kevin Brown, told industry site Music Week.

"Given that download sales are declining and Spotify is growing rapidly, particularly in the UK, it is only a matter of time before Spotify is bigger than iTunes across Europe as a whole."

Brown added that a "significant amount" of the million new British Spotify users are paying for a subscription, rather than listening to its free, advertising-supported version. The growth has been sparked by marketing partnerships with Vodafone and the Sunday Times.

"Organic subscribers are coming to us in their droves as a result of the publicity from those initiatives. Streaming is growing so rapidly in the UK - we’ve got a perfect storm here," said Brown.

Spotify said in March 2013 that globally, it had 24m active users, including 6m paying subscribers. The company has not updated those figures since, but music industry sources tell The Guardian that the company has been waiting to surpass 10m paying subscribers before announcing new stats – and that it may hit this milestone in the next few months.

The UK is one of Spotify's biggest markets. The company's UK subsidiary published financial results for 2012 last November, when it generated £92.6m from British customers, including £64.8m from subscriptions and £9.1m from advertising. The UK accounted for just over a quarter of Spotify's global revenues in 2012.

In 2013, streaming music services generated £103m of revenues in the UK according to figures from industry body the BPI, which said that British music fans streamed 7.4bn songs that year – double the total in 2012.

Streaming accounted for just 10% of overall UK recorded music revenues in 2013 – just over £1bn – but Brown told Music Week that Spotify expects that proportion to rise to around one third in 2014. But for all the talk about overtaking Apple's downloads store, Spotify is seemingly seeing more threat from another tech giant.

"I don’t see iTunes as our primary competitor - that’s YouTube," said Brown, criticising labels that decide to keep albums off Spotify in favour of exclusive deals with iTunes. "We’re still put in the same bucket as iTunes by some labels, whose music then appears on YouTube. That drives me nuts."





• Streaming is good for labels, but are they good for streaming?

• Zoe Keating reveals iTunes, Spotify and YouTube payouts

• Billy Bragg: Labels not Spotify deserve payments scrutiny





The prospect of Spotify overtaking iTunes is causing concern for some musicians and songwriters, who are worried about streaming's ability to sustain artists' careers – a sale of a 99p iTunes download pays out just over 69p to rightsholders, while a Spotify stream averages a payout of between 0.35p and 0.5p. In both cases those rightsholders then pass on varying percentages of those royalties to the music's creators.

Radiohead and Atoms for Peace's Thom Yorke famously described Spotify as "the last desperate fart of a dying corpse" last year, suggesting that "as musicians we need to fight the Spotify thing". Fellow musician David Byrne wrote in a comment piece for The Guardian that "in future, if artists have to rely almost exclusively on the income from these services, they'll be out of work within a year".

For its part, Spotify has argued that streaming pays off over a longer period for musicians, as a royalty is paid every time their track is played, rather than the downloads model of a one-off payment when it is purchased.

In December 2013, Spotify launched an artist-focused website explaining how it calculates these payouts, and outlining current monthly payments for a range of albums – from $3,300 for a niche indie album to $425,000 for a global hit album – as well as predictions for how much more they'll earn if the company reaches 40m paying subscribers.

The company is also trying to persuade artists not to give Apple exclusives on albums that are then withheld from Spotify and its streaming rivals.

Artists like Beyoncé have clearly done well from iTunes exclusives, but Spotify's current case study is singer Kiesza, whose 'Hideaway' single was available for three weeks on the streaming service before going on sale, when it promptly topped the iTunes and official UK singles charts.

For now, Spotify versus iTunes is a fairly clear streaming versus iTunes comparison. But with Apple already having a streaming radio service – iTunes Radio – in a few countries, and tipped to launch a full Spotify-style "on-demand" streaming service later this year, the two companies are likely to be even more direct competitors in the coming years.

• Is Spotify going to save the music industry or destroy it?