Spotify is closing in on licensing deals with the world’s largest record labels, hoping to clear a hurdle in the streaming music company’s path towards an initial public offering after months of tough negotiations. As part of the proposed deals, the music companies have agreed to trim the royalty fees that Spotify pays for their songs, according to people familiar with the discussions. In exchange, Spotify would restrict the biggest album releases to its paid tier for a period of time — a substantial concession after years of friction with pop stars including Taylor Swift, who pulled her music from the platform in 2014. Recorded music companies, and the likes of Ms Swift, want to limit Spotify’s free service, which generates far less revenues than paid subscriptions. People close to the matter say licensing talks have picked up considerably and deals could be inked within weeks after months of gridlock, with the caveat that nothing has been signed and talks could again stall. The long-term licensing deals would boost Spotify’s appeal before an IPO, as it looks to convince investors it can translate its fast customer growth into a solid business. Spotify, valued at $8.5bn in a recent funding round, made a net loss of €173m in 2015, despite revenues surging to €1.95bn, as royalty and distribution fees jumped to €1.63bn. 50m Number of paying customers using Spotify Spotify’s contracts have been up for negotiation with Universal, Sony and Warner, the label owners on whom it depends for most of its 30m songs. It has not had a long-term contract with Vivendi-owned Universal, the world’s biggest record company, in nearly two years. The “big three”, which together control the vast majority of the world’s popular music, also hold minority stakes in Spotify and have an interest in a public offering succeeding, label executives say. The Big Read How streaming saved the music industry Spotify and Apple are making money for the big labels but technology is likely to change the equation again This month Spotify said it had reached a milestone of 50m paying customers, underscoring the music industry’s dependence on the streaming pioneer as it navigates a digital future. Spotify enjoyed a growth spurt in the past year, adding 20m paying subscribers, while its main rival, Apple Music, has so far signed up only 20m paying customers. Spotify’s growth has helped revive the music industry, as streaming last year powered the fastest revenue growth for recorded music since the file-sharing days of Napster. The music industry has for years been pushing for “windowing”, or making some music available only to paying customers for a set period of time, likening the strategy to releasing movies in theatres before allowing them to be streamed online. However Daniel Ek, Spotify’s founder, has steadily defended his “freemium” streaming model as the path forward for music in the digital era, even in the face of a high-profile critique from Ms Swift, who said she was “not willing to contribute my life’s work to an experiment”. Mr Ek has argued that offering music for free lures in new listeners who later sign up to pay. Spotify declined to comment.