The Associated Press is reporting that Yahoo! could be planning a MP3 music service. It's not clear at the moment if Yahoo! wants to sell music downloads like Apple and Amazon or offer ad-supported downloads.

According to the AP article, two record company execs have said that Yahoo! has been talking with the major record labels. At this point, the four largest labels (Universal, Sony BMG, Warner, and EMI) have all agreed to make at least some of their catalog available as DRM-free MP3 files for other services including Amazon MP3. So it's probably only a matter of time before we see dozens of online services popping up with access to a large selection of DRM-free music from major label artists.

Yahoo! currently offers free and subscription online music streams rather than downloadable songs.

[via Techmeme]