Spotify offers 16 million songs under a 'freemium' model.

Spotify offers 16 million songs under a 'freemium' model.

Online music service Spotify has become Australia's first free streaming music provider after launching in Australia today.

Sweden-based Spotify offers 16 million songs under a "freemium" model, which gives subscribers the choice of listening for free with advertisements or paying to upgrade to ad-free and mobile-based services.

The new arrival will ratchet up the competition in the fast-growing streaming music service market, where Rdio and JB Hi Fi's "Now" are already operating.

Spotify managing director for Australia and New Zealand, Kate Vale, declined to say how many users had signed up on the first day of the service but said "tens of thousands" had registered their interest online ahead of the launch.

The Commonwealth Bank, McDonald's, Virgin Mobile and Carlton United Breweries have signed up as exclusive advertising partners for the first three months, meaning Spotify free users will hear only ads from those organisations.

Major recording labels have signed content deals and users may also hear promotions for artists.

Signing up to Spotify can only be done through a Facebook account - a feature that drew some complaints from Twitter users on Tuesday.

Ms Vale said Facebook access was Spotify's standard international model.

"We believe music is a very social experience," she said.

Users need to change their privacy settings if they do not wish to have their music selection displayed on their Facebook page.

Telecommunications consultancy Telsyte says about 500,000 Australians use streaming services currently, with numbers expected to grow by 36 per cent by 2015.

AAP