According to a report in London's Financial Times yesterday, the computer company is talking to music industry giants about a radical new business model that would give customers free access to its entire iTunes music library.

The motivation behind the talks on Apple's side appears to be that while its online music store is the most successful, the profits it makes for the company are a fraction of those coming from hardware sales.

And on the other side, ever since the first iPod was launched in 2001, the music industry has been kicking itself for not securing a slice of the profits from the massively popular device.

The plan now under discussion appears to be a replica of the deal made by Nokia for its 'Comes With Music' device with Universal Music in December.

It also follows extensive market research, which executives say shows strong demand for packages bundling music with the cost of the device.

And if the deal comes off, it could give the struggling music industry a boost, at the same time driving demand for Apple's hardware.

But the paper quoted insiders as saying a sticking point in talks was how much the computer company was willing to pay for access to the music labels' libraries.

Apple refused to comment on the plans, but according to two executives, it is offering participating labels a total of just US$20 (S$28) for each device it sells, compared to Nokia which is believed to be offering US$80 per handset.

At the same time, one executive said research had shown that consumers would pay a premium of up to US$100 for unlimited access to music for the lifetime of the device.

According to one executive, the outcome of the talks depends on 'who blinks first, and whether or not anyone does blink'.

The Financial Times says Apple is also believed to be looking into offering music subscriptions with its iPhones.

Details of how this would work are not available, but subscription models currently being discussed in the music industry include allowing customers to keep up to 40 or 50 tracks a year.

Under these models, the songs would remain the property of the purchasers, even if they changed their devices or their subscriptions lapsed.

An industry executive said research showed that users would be prepared to pay around US$7 or US$8 a month for such a service.

iTunes customers currently pay 99 US cents per song.

Meanwhile, Nokia is believed to be aggressively courting the big music labels in a bid to have as many as possible on board when it launches its Comes With Music devices in the second half of the year.