Daniel Ek defended the service in a blog post, saying he had co-founded the platform to protect artists from piracy and had paid more than $2 billion to music labels and publishers since 2008.
In the blog titled "$2 Billion and Counting," Ek said that piracy doesn't pay artists a penny, "nothing, zilch, zero," while Spotify's payouts for a top artist like Swift were on track "to exceed $6 million a year."
Artists complain that music streaming services and file sharing have sharply cut into album sales and that the fees Spotify pays to record labels and music publishers, with a portion eventually funneled to musicians, is too small.
Swift pulled her music from Spotify last week, meaning her songs, which were among the most streamed on the service, are no longer available to its 50 million users.
"Music is art, and art is important and rare," Swift wrote in the Wall Street Journal last summer. "Important, rare things are valuable. Valuable things should be paid for."
Spotify says nearly 70 per cent of the revenue it receives from paying customers goes back to rights holders in the form of royalty payments and the more people who pay for Spotify the more money artists get. Customers pay $9.99 a month for Spotify's premium streaming service, which gives them access to its music library on smartphones and computers without any advertisements.
The company claims 12.5 million of its 50 million users subscribe to the premium service, the remainder using the free service that is funded by advertisements.
Ek conceded that it was a big problem if "money is not flowing to the creative community in a timely and transparent way."
"We will do anything we can to work with the industry to increase transparency, improve speed of payments, and give artists the opportunity to promote themselves and connect with fans," Ek wrote.
Also on HuffPost