In an unexpected development, Universal Music plans to create a music-industry-owned online music store to take on Apple, according to a new report in BusinessWeek.

"BusinessWeek has learned that [Universal chief Doug Morris] has already enlisted Sony BMG Music Entertainment as a potential partner and is talking to Warner Music Group. Together the three would control about 75% of the music sold in the U.S.

"Besides competing head-on with Apple Inc.'s music store, Morris and his allies hope to move digital music beyond the iPod-iTunes universe by nurturing the likes of Microsoft's Zune media player and Sony's PlayStation and by working with the wireless carriers. The service, which is one of several initiatives the music majors are considering to help reverse sliding sales, will be called Total Music."

As Apple controls at least 70% of the online music market today in terms of actual sales, Universal has an uphill battle. But if they continue on their current trajectory, where they're denying Apple the right to sell DRM-free versions of their tracks in favor of other vendors like Amazon, and then corral the other big labels to join them, Apple could face a bumpy road ahead.

Universal Music Takes on iTunes [BusinessWeek]