Music buyers might be abandoning the high street in their droves, but Spotify is yet to establish itself as a viable, profitable business.

Despite being valued at $3bn and managing to accumulate $110m in investor funding, the streaming service is yet to start turning a profit, with losses currently outpacing growth. One contentious part of the company’s business model is the meagre royalty rate currently paid to artists, which, at approximately $0.004 per play, is substantially lower than that offered by rivals like iTunes. Although payouts have risen in the last three years, numerous high-profile acts – Coldplay and Adele among them – have previously refused to license their songs to Spotify as a result of its licensing policy.

According to The Verge, the Stockholm company is entering into negotiations with the Big Three (Warner, Sony and Universal) with the aim of pushing down artist payments even further. At present, c.70% of Spotify’s revenues go towards royalty payments, and the company claims that a licensing break from the majors is necessary to ensure the survival of the business. Once advertising costs are factored in, Spotify bosses claim they can currently only devote around 10% of their revenue to improving and expanding the service.

Spotify is also apparently bidding to extend its free service to mobile phones. At present, Spotify only offers a 30 day trail for mobile users, something it believes is standing in the way of growth. Music streaming, it should be noted, is currently up 700% in the UK.