Andrew Edgecliffe-Johnson, reporting for The Financial Times (who’ve been spot-on in their recent Apple rumor reporting):
Apple is in discussions with the big music companies about a radical
new business model that would give customers free access to its
entire iTunes music library in exchange for paying a premium for its
iPod and iPhone devices.
Apple would not comment on the plan, but executives familiar with
the negotiations said they hinged on a dispute over the price the
computer maker would be willing to pay for access to the labels’
Nokia is understood to be offering almost $80 per handset to music
industry partners, to be divided according to their share of the
market. However, Apple has so far offered only about $20 per device,
two executives said. “It’s who blinks first, and whether or not
anyone does blink,” one executive said.