AAPL Apple Inc

TOKYO—Sweden's Spotify AB has joined other online music providers trying to crack the Japanese market, where compact discs still dominate.

The world's biggest music-streaming service said Thursday it will offer two services in Japan: One, backed by advertising, is free; the other, free of ads, costs ¥ 980 ($9.73) a month. Both will allow users to listen to more than 40 million songs, though the subscription service offers perks including better sound quality.

The company said earlier this month that it had reached 40 million paying subscribers, and in June that it had 100 million active users in total.

Spotify's competition in Japan includes Apple Inc.'s Apple Music and Alphabet Inc.'s Google Play Music, as well as local services like messaging-app-operator Line Corp.'s Line Music.

Japan is second only to the U.S. as a music market, with sales of roughly ¥ 300 billion ($2.8 billion) last year, but digital downloads and streaming accounted for only about 16% of that, according to the Recording Industry Association of Japan.

A 2015 association survey of some 2,000 music listeners found that 42% listened to CDs while just 3.6% used subscription-based music-streaming services—suggesting much growth potential, but also that none of the services so far has taken off in a significant way.

Write to Alexander Martin at alexander.martin@wsj.com

(END) Dow Jones Newswires

September 29, 2016 05:35 ET (09:35 GMT)

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