The Welsh language music app Apton is “highly unlikely” to be able to carry on without further Welsh Government investment, its owner has said.
Sain Records boss Dafydd Roberts said the app now had 3,000 users.
He claimed many were primary schools seeking a “safe” Welsh music streaming service and it contributed to the goal of a million Welsh speakers by 2050.
The Welsh Government said growing the creative music industry is a key priority.
In evidence submitted to the Welsh assembly’s culture committee, Mr Roberts said it was “difficult” to compete with major corporations like Spotify and Apple Music.
Sain Records has already invested £100,000 in the venture with the Welsh Government contributing a further £30,000.
In his evidence to the committee Mr Roberts said: “Developing an app of this kind is an expensive process in terms of the technology and programming, and in terms of updates and maintenance.
“It is highly unlikely that Apton can continue without further investment in its development.”
Earlier this week Yma o Hyd, a song by folk singer and Sain Records founder Dafydd Iwan reached number one in the iTunes UK song chart.
On the issue of how much record labels receive from big music streaming services, Mr Roberts said: “The problem, of course, is that the income that Sain receives is very limited at £0.0045 per stream (less than 0.5p), and we then have to pay a royalty to the artist out of this amount.”
Sain Records has an agreement with iTunes to download and stream their music – almost 15,000 tracks – and they have used a distributor for all other digital platforms, including Spotify.
Mr Roberts said Sain Records understood their tracks were streamed about 4.5 million times last year.
He said streaming music had increased opportunities to distribute Welsh language music, but “it is clear that this is not viable, and will not sustain the recording industry for the future”.
In August, Mr Roberts called on the Welsh Government to establish a strategy for the music industry in Wales and for a body to be established that would oversee the music industry in Wales in its entirety.
A Welsh Government spokesman said: “Growing the commercial music industry is a key priority for Creative Wales and will build on the success of current initiatives as well as developing commercial opportunities to ensure Welsh language artists can effectively exploit their music on digital platforms.”