The deficit came despite the company increasing its revenue for the year to €187.8m, compared with €73.9m in 2010.
The loss has been attributed to the heavy costs involved in licensing from record labels the music Spotify offers.
The service confirmed plans to expand to Canada, as well as some countries in Asia and South America.
It is already available in 15 countries, including the UK and US.
The London-based firm has also set up subsidiaries in Singapore and Hong Kong, but is yet to launch the product in either country.
The Wall Street Journal reported growth in the company's premium-member subscriptions, citing its latest financial report. Income from paying customers last year made the firm €156.9m, up from €52.6m in 2010.
However Spotify's other revenue model - playing ads inbetween music for non-paying subscribers - has slowed.
The company recorded only a minor increase - €6.5m - in advertising revenue, making €27.6m in 2011."