Is Spotify A Trojan Horse For Music Record Labels?

But where it does get murky is when you learn that when Spotify was still young, Sony BMG, Universal Music, Warner Music and EMI bought a small but significant stake in Spotify - 18 percent for around 9700 Euros - and to round things up, Ek was the co-founder of uTorrent, a popular file sharing client. It's a bit like the co-founders of Pirate Bay launching a legal website and got the big movie companies on board.

Spotify might be generating some significant revenue but that's not even enough to cover running costs (rising due to increase in streaming costs), let alone to generate a profit, which explains why at the beginning of September, it decided to revert to invite-only free subscription.

Which leaves us with scratching our heads and asking, why would record labels and independent companies back a horse that's losing tens of millions every quarter? Are they subsidising it through a very "easy ride" as Charles Arthur put it? Or is there something else that hasn't been disclosed yet? 

One thing is for sure, Spotify is looking to grow even more - it grew by 800 percent in the six months to the end of August 2009 - and could by the end of next year overshadow iTunes and the rest of the market. Food for thought.