SoundCloud is developing a way for artists to get paid for their music via a revenue sharing approach that will likely include platform advertising and user subscriptions.
The music platform, dubbed the "YouTube for audio" will be introducing a tier called Premier to its current free and paid subscriptions.
The revenue sharing strategy is called "On SoundCloud" and will initially be invite only for musicians.
"We have listeners in every single country in the world - and in space," said Alex Ljung, CEO and founder of SoundCloud, referring to the fact recordings of the International Space Station were posted to SoundCloud by a Canadian astronaut.
Songstress Lorde is one of the best known artists to emerge from SoundCloud after she posted her song "Royals" on the platform, catapulting her to fame.
The advertising program will allow both artists and record labels collect royalties. SoundCloud eventually plans to introduce a Premium subscription, which would allow users to pay to bypass the ads.
According to people close to SoundCloud, part of the talks between the music sharing platform and record labels include labels getting equity stakes in the platform. In exchange for this, labels will agree not to sue SoundCloud for past copyright infringements.
Currently SoundCloud has around 175 million unique listeners per month and hit 250 million users last year. Capitalizing on this reach could create a huge amount of income for both artists and labels. Until only recently, SoundCould used a "freemium" model to make money, essentially giving extra benefits and features to those who paid for the service.
Users will be able to continue posting their music, but will be capped at three hours of music in total. After this, users can pay for an unlimited membership at $15 per month or $135 per year. There is also a "Pro" membership, which only costs $6 per month, and allows for up to six hours of content.
It is still unclear as to what the ads will look like on SoundCloud, however we do know that Red Bull is set to be one of the first advertisers on the service.