Music-streaming firm Spotify has signed a major deal with Universal Music, which moves it a step closer to a lucrative billion-dollar flotation.

The Swedish company, which has 100 million active users in 60 markets, has signed a multi-year licensing deal with the record label, giving it greater access to artists such as Lady Gaga and Kanye West.

But as part of the agreement Spotify will let artists choose to restrict their albums to its paid tier for the first two weeks after release, with singles available on its free site.

This was a significant concession, as pop star including Taylor Swift, also signed to Universal, pulled her music from the platform in 2014 in an argument over payment.

Record music companies and stars have battled streaming services such as Spotify, claiming they do not get a fair share of the revenue for creating and marketing music.

Spotify chief executive Daniel Ek said: "We know that not every album by every artist should be released the same way, and we've worked hard with UMG to develop a new, flexible release policy."

Universal chief executive Sir Lucian Grainge said streaming services over the last eight years had come to represent "the majority of the business".

But he added: "Our challenge is transforming that upturn into sustainable growth."

Spotify has been in talks for several months with the big three music labels – Universal, Sony, and Warner – who control the majority of the 30 million songs available on streaming services.

A series of long-term agreements with the industry would boost Spotify's appeal before an initial public offering, as it seeks to convince investors it can translate its fast growth into a solid business.

The service, which was launched in 2008 has 50 million paying customers, and was valued at $8.5bn (£6.8bn) in a recent funding round.

However, Spotify made a net loss of €173m in 2015, despite revenues commanding revenues of €1.95bn.