Earlier this year, Universal Music Group big-cheese Doug Morris opted against a new 2-year contract with iTunes, and instead has a rolling month-to-month contract with Apple.  According to a report today in BusinessWeek, the UMG is gearing up to launch an iTunes competing service of their own to be named “Total Music”.   BMG Music have also thrown their name into the program and is having talks with Warner Music Group. Together the three companies music giants would have control of over 70% of all the music sold in the U.S., with Apple iTunes currently holding control of over 70% of the music sold online in the U.S.The new Total Music service would be looking to hook up with direct iPod competitors as well, such as Microsoft’s Zune player, mobile phone carriers and game consoles looking to work themselves into more a part of total home entertainment.

From PC World’s news report:

The plan is to get hardware makers to absorb the cost of a $5 monthly subscription, so that consumers would get their music essentially for free when they buy a new player, and the hardware industry would be compensated by selling many more devices.

“You know that [the subsctiption is] there, and it costs something,” one tech executive who has seen Universal’s presentation told BusinessWeek.com. “But you never write a check for it.”

Microsoft is one lead candidate to take up the fight with Universal and revive its Zune music player in the process.  But the wireless carriers are the most adept at bundling devices and services under a contract to keep the “free” feeling alive. I’d expect fierce fighting by wireless companies for deals with Universal.

While Universal is currently running DRM-free music trials on iTunes rivals, it is not said if Total Music would be DRM-free. But removing DRM from the digital music landscape could be the the next big cause, giving a competitive advantage to its champion.

Microsoft are not taking the launch of the new iPods lightly.  Bill Gates glossed about the new Zune 2 and the launch date of November 2007 in a widespread video interview recently.  If you’re not in the know, Zune 2 will be avabilabe 80Gig hard-drive, 8Gig and 4Gig flash editions.

According to reports from a “source” inside Microsoft, a new batch of Zunes are due out in both flash memory- and hard drive-based forms. The new, smaller, flash Zune (the Draco) will be hitting shelves in pink, red, black, or army green colors, will have a 4GB or 8GB capacity, and will feature a “squircle” (the source’s term, not ours) for navigation, which won’t have a center button but can be pushed, “From any side.” The hard drive-based player (the Scorpio) will be available in 80GB, sports the soon-to-be infamous “squircle,” and touts a screen which the source claims is “awesome” for video.