If the service comes into fruition, reports are suggesting that it will work in a similar way to the programs offered by online music providers Napster and RealMedia. Users will be able to download unlimited tracks on a monthly basis for one set fee. These songs will then play on different media devices including the company’s new Xbox 360 gaming console.

In a bid to present a serious alternative to those services offered by Apple, Napster and co, Microsoft is apparently including advanced community aspects and playlist-sharing tools. The company may also be planning to provide Microsoft-formatted versions of songs bought from the iTunes store to enable users to play these songs on devices other than the iPod.

The speculation caused share prices of Apple, Napster, RealNetworks and Yahoo!, who all offer music subscription services, to fall.