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Jeff Price of Audiam.com

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Say you've got a band. (Even if you don't, indulge the part of you that wishes you did.)

And say that people on YouTube are posting videos based on your songs because, naturally, they're great songs. But as a smaller artist, you hit a wall: YouTube only runs ads alongside videos that it's cleared all the rights to. And until recently, it had only done rights-clearing deals with huge record companies.

So you're not seeing any revenue from your hard-written words and hard-strummed chords. Do you let it slide, or do you go after your own fans, somehow demanding a takedown?

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Jeff Price, a serial entrepreneur and veteran of the digital-rights world, has a third way. His New York-based startup, Audiam.com, has hammered out a way to allow YouTube ads to run on videos with music from independent artists and rights-holders – and for them to get paid for it.

For years, YouTube has walked a fine line between creators and users. Users, of course, like uploading videos that use other people's songs in the background. Maybe it's a TV tribute, or maybe it's a montage of boats. Rights-holding giants such as Sony and Warner Music Group – not being that interested in the boats – had mixed feelings about this.

So, some years back, YouTube's owner pulled off a remarkable feat: Instead of having to remove tens of millions of user-submitted videos, it gave the big companies access to its systems, and helped them find videos that use their music. Then it gave them a choice. They could order that the video be pulled down. Or they could allow YouTube to run ads on them – and pocket some of the proceeds.

It worked out well. The world of YouTubers went happily on its way, uploading Buffy tributes set to Gwar or what-have-you. But YouTube didn't make this deal with that many players – a couple of hundred on its billions of videos – it was mostly with huge companies that have enormous catalogues.

To complicate things further, there are actually two different rights to every song: One for the melody and lyrics, or the "composition," and another for the recording itself. Both of these rights – as well as the copyright for the video from the user who made it – have to be cleared before YouTube can run an ad on it.

Which brings us back to Audiam, which brings artists who aren't represented by the leviathans into the loop. The service has negotiated the same kind of deal with YouTube that the major labels have. After signing up to Audiam, artists and rights-holders upload the music or song titles they own.

The service then uses a combination of YouTube's search tools and its own technology to hunt down every video in the system that uses that song. Among other techniques, it scans an audio "fingerprint" against YouTube's own catalogue, so even clips that make no mention of the song will show up.

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"I will crawl through the belly of YouTube and find the videos with every technology known to man, and say to YouTube, 'please put an ad on those,'" says Mr. Price, who has a knack for summing up a complicated process.

If the rights to the composition and the recording are both in-hand, and the user who posted it signs off, YouTube can start running ads – and the money can start flowing.

Just how much money depends on the popularity of the video, of course. In its first months of operation, Mr. Price says the service has collected upwards of $100,000 in advertising revenue for its clients.

Audiam takes a 25-per-cent cut of whatever it collects from the fan-uploaded videos it finds. All money raised from videos a band posts goes straight to its creators. Mr. Price sees the results as a win-win scenario: Bands can now actively entreat their fans to make videos and cover their work, since it generates exposure for the fans and revenue for the artist.

"You can turn YouTube into PledgeMusic or Kickstarter," he says. "The artist gets paid and the fan gets thanked. You could say, 'Please use my music in your YouTube video. I want you to.'"

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