Microsoft is quietly preparing a music service of itis own that will compete with the iTunes Music Store (iMS), according to a C|Net report from Evan Hansen. The service, originally supposed to be revealed back in January of this year, will most likely be a subscription-based model, similar to other label-sponsored services like PressPlay and MusicNet. PressPlay, which was purchased by Roxio last week, currently runs on the same Microsoft technology that will be used in the Big Redmondis new service. In addition, Microsoft has some additional measures aimed directly at making renting music more attractive to consumers. From the article:

Services such as Pressplay, which uses Microsoft technology, have been put on the defensive with news that Apple has sold more than 2 million downloads since April 28, the day its iTunes Music Store launched. But Microsoft is betting that new security enhancements planned for later this year could make renting music, rather than owning it, more attractive to consumers.

Microsoft said it is developing software that makes it easier for subscription services to transfer music to portable music players. These services now provide unlimited downloads of hundreds of thousands of songs to a PC for a monthly fee, but they typically do not allow files to be moved around much. Microsoft said it will soon address this shortcoming with technology that will allow unlimited downloads to a portable device--a dramatic improvement.

"We can already support unlimited downloads tethered to the PC," said Jonathan Usher, director of Microsoftis Windows Media division. "The next step is enabling access to unlimited downloads on consumer devices."

With Microsoftis service leaning towards an expanded subscription model, the article continues to discuss the virtues and problems with that sort of system:

Subscription services are "ahead of their time" according to a senior executive at another record label, who said a key stumbling block is providing unlimited access to subscription music away from the PC on portable music players and other devices. "Ultimately, there will be a huge audience for this, but the services need to provide portability," he said.

"Downloads are very close to an old-fashioned experience," he added. "Subscriptions are much more of a shift...but the technology isnit right for the shift to happen. Weire hoping it will happen this year, that the technology companies will provide portable players that can play the music."

Microsoftis Usher said that Windows Media already supports secure playback on some 15 portable music players, including the Diamond Rio, but only for songs that are purchased, not rented. He said the company is continuing to work on enhancements to support subscription services on devices.

Microsoft plans to add support for a clock in portable music players and other consumer-electronics devices. The clock would provide a "time out" feature much like that used in PC versions of its DRM software. If customers donit pay their monthly subscription bills by a certain date, access to the files on those devices is cut off.

The original article has much more information and quotes, and is a good read.