Two major players in the music industry are joining forces. SoundCloud has reportedly reached a licensing agreement with the Universal Music Group (UMG) that covers the entertainment company's recorded-music division and publishing group, the New York Times reports.

According to the outlet, the deal will open up Universal's catalog to the free streaming service as well as allow the musicians to profit off advertising whenever their songs are accessed on SoundCloud.

Universal chairman and CEO Lucian Grainge spoke about embracing the new collaboration between the two music bigwigs in an official statement on Music Ally, saying the company has always been committed to empowering and supporting innovations in the line of SoundCloud.

He added, "With this partnership, we're ensuring recording artists, songwriters and labels benefit, both creatively and commercially, from the exciting new forms of music community engagement on SoundCloud. We look forward to working with SoundCloud and supporting the company's evolution into a successful commercial service."

The partnership with Universal also includes user-generated content, one of the main draws of SoundCloud that is often a big issue with labels and artists for copyright reasons. This particular provision has set SoundCloud apart, according to Chief Executive Alexander Ljung.

He explained that SoundCloud allows artists to profit even from remixes by the userbase, which is a feature that is new for the industry. Through this, the musicians can benefit in multiple ways from putting their work on the service.

"We're creating this framework that incentivises user-generated content, and all of the Universal artists should be able to have another revenue stream from that," Ljung explained. "There's going to be a lot more revenue opportunities available both directly from content, and indirectly from remixes."

The streaming service has been amping up its roster of label partners as of late with existing deals with UMG, Warner, Merlin, National Music Publishers Association (NMPA) and PRS for Music. There have been some concerns over the development, specifically that the company will create a premium tier costing around $9.99 a month like much of its competitors, but Ljung is confident that the company is headed in a different direction.

The SoundCloud executive pointed out that their service offers a different profile from all the other music streaming services with over 100 million songs and a very open service that includes 175 million listeners and more creators than ever. The scale of the company is "unprecedented" so the team is looking to create a subscription model that will reflect the strengths of their own platform.

"We are looking at all of those things and then adding a subscription element as well," Ljung concluded. "It will naturally be something that's different, just because of the platform."