Microsoft mulls plan for new music service

Microsoft is in talks with some of the major record companies about creating a new music service, CNET has learned.

The software maker, which has a spotty record in digital music, has discussed creating a delivery service that would supply tunes to the Xbox as well as an upcoming Windows-based phone, according to sources with knowledge of the talks.

It was unclear exactly how this will differ from Microsoft's Zune Music Pass, which is the music service currently available to Xbox subscribers.

Negotiations are still in a preliminary stage and the two sides have yet to drill down into all the specifics, the sources said. Nonetheless, Microsoft has roughly outlined a service that it hopes could launch sometime this year and include streaming music as well as downloads, the sources said.

They added that the company has also mentioned the possibility of teaming with HTC and Nokia on the proposed phones. A spokeswoman for the company said, "Microsoft does not comment on rumors and speculation."

Expect the labels to work hard to make this deal happen. While Microsoft's past forays into Web music haven't met with much success (the mothballed Zune digital music players and defunct Urge music service), the record companies will welcome the chance to have a higher profile on the Xbox, with its 40 million worldwide Xbox Live subscribers, as well as on any new Windows phones.

Since Microsoft already operates the Zune Music Pass, the company already possesses music licenses. It's still unclear whether Microsoft must acquire new licenses for its service and that will depend on how Microsoft wants to do with the music.

What it sounds like to me is that Microsoft has an eye on upgrading its music store to better serve mobile devices. Google did much the same thing with Google Music and its Android operating system.

In addition to Google, many of the top phone makers have recently moved to augment their music features. HTC, in particular, acquired a majority stake in Dr. Dre's Beats to improve the audio capabilities of its smartphones.

In August, CNET broke the news that Research In Motion was planning to add music to its Blackberry Instant Message service.