Microsoft is going to launch a competitor for Apple's iTunes store at the end of August. People close with Microsoft's music site said that it will offer an "à là carte" service where users can buy and download digital audio tracks.
This business model has been very successful for Apple, which has sold more than 100 million songs in about a year time.
It is unclear how much Microsoft would charge per track, but it is understood that major record labels granted the software giant similar terms to those offered to Apple, which sells single tracks for 99 cents.
People familiar with the music store praised its user-friendly interface. It will include a powerful song search engine and a feature that would recommend artists and tracks based on customers' musical preferences. Consumers will also be able to share playlists and chat with each other.
"It will be 'share, talk and buy' for those who want it. They are really going for a feature-rich music experience," said another person familiar with Microsoft's music store.
Lisa Gurry, MSN director, said it was "too early to confirm details" about the new music store, but she noted the company would add features to the site on an ongoing basis.
Initially Microsoft's music store will not offer a subscription service, which would allow users to rent 100,000's of songs for as long as they continued to pay a monthly fee.
But in future when Microsoft's new software version of digital rights management (DRM), which prevents piracy, is ready users can expect a subscription service to be launched. This will also allow them to transfer tracks from PCs to their portable music players.
The inability to easily transfer "rented" songs to portable devices has been considered a key drawback of subscription services and some in the industry believe Microsoft's new DRM software could provide a huge boost to the subscription model.
The company has not ruled out adding a subscription service at a later date, Ms Gurry said.
Dethroning Apple's iTunes from the top spot could prove difficult.
The music store commands a 70 per cent share of the legal download market and helps drive sales of Apple's iPod digital music player, which has an estimated 25-30 per cent share of the global digital music player market.
But the market is in its infancy, and competitors are taking aim with rival music services and portable players.
Manufacturers such as Philips and Samsung are soon expected to launch handheld music and video players that will be compatible with Microsoft's music store.
In late August Microsoft will launch somewhat a test version of their music store. Marketing for their store will not start until it has been operational for several months to clear out any bugs it may discover.