Some artists stand to earn thousands as Sony Music cancels their historic debts.
Musicians who took on debt when they signed on to the label prior to 2000 did not always earn enough to repay their advances. Black artists have been particularly affected.
The move, which comes amid growing pressure on labels to distribute income more equitably, will allow these artists to profit from streaming revenues and other royalty payments for the first time.
Music industry lawyer Aurelia Butler-Ball said many of the record deals made before 2000 didn't know streaming platforms would ever exist: "Therefore, artists didn't have the right mechanisms in place to see those revenues."
She said other major labels such as Universal and Warner Music may follow suit.
"I think this is absolutely a sign of labels recognising that there is pressure coming from not only artists but fan bases, and it's increasingly being talked about publicly."