CNET reports that Microsoft is in talks with some of the major record companies about creating a new music service, utilizing streaming rights, rather than just downloading music.
The service would supply music to Windows Phone and Xbox 360, and would presumably be different from the existing service by not requiring a fee to play, like Spotify or Rdio on the desktop.
CNET also reports that Microsoft may be planning to hook up with Nokia and HTC, both major Windows Phone 7 OEMs, to partner in the deal.
Negotiations are still apparently in an early stage and specifics are not available yet.
Read more at CNET here.