A deal with a group which looks after 20,000 independent record labels will see bands start getting payment for streams.
Merlin – which already has agreements with YouTube, Spotify and Deezer – has partnered with On SoundCloud.
If you’re an independent artist the breakdown of where your music is being played can help plan a tour and build your fan base. But until now you didn’t actually get any money when your tracks were streamed.
This deal means adverts will be displayed alongside content.
An artist or label will get “the majority” of the money paid to SoundCloud by that advertiser.
On SoundCloud is a partner programme where ad revenue is shared amongst creators, the ads are only available to US users at the moment, with a view to it being rolled out to everyone else in the future.
Despite the small launch there are plans to make the scheme open to all users.
Some of the labels linked with Merlin include Domino, Ninja Tune, Warp Records and Beggars Group – which includes XL, Rough Trade and Young Turks.
BBC Radio 1Xtra’s DJ Target previously told Newsbeat SoundCloud “is a hub for new artists” and uses it on a daily basis to find emerging talent to play on his show.
“I would say it’s the number one place for new artists to showcase their talent,” he said.
Announcing the deal the site said: “When we started in 2007, one of our chief priorities then, as it remains today, was championing independent artists.
“The indie community has always been at the heart of SoundCloud, and our deal with Merlin is another way for us to further support the independent community by opening a new source of revenue for them.”
The deal is an important one for SoundCloud as well as independent labels and artists.
The site has caused issues with major record companies because it doesn’t pay royalties to labels or publishers outside of the On SoundCloud scheme.
Sony Music recently started removing songs by its artists from the site, citing a breakdown in licensing negotiations and “a lack of monetisation opportunities” on the site.
Even some independent labels, who tend to overlook royalties to note SoundCloud’s value for promotion and analytics on listeners, have been speaking out in recent months – suggesting that they’d rather fans listen on Spotify and other streaming services that pay royalties.
Jay Z’s streaming service Tidal recently unveiled its offering for independent musicians.
Discovery is a forthcoming feature that will allow artists and labels to upload their music directly to the streaming service.
The service will also offer an artist dashboard giving access to listening data, including locations and user details.