Apple is in talks with major music labels to beef up its ringtones and offer over-the-air music downloads on its upcoming 3G iPhone, according to The New York Times.

The Times cited label executives who leaked reports of “very active” negotiations. While a final deal has not yet been inked, the paper quoted a “label executive familiar with the matter” as saying that Apple wants a big launch in June.

Apple’s annual Worldwide Developers Conference begins June 9, and many expect to see the introduction of the 3G iPhone during the event.

Ringtones: A Multibillion-Dollar Market

IDC expects that mobile entertainment will history for 5.1 percent of the $800 billion global wireless services revenue and 23 percent of all mobile input revenue by 2011.

Ringtones and ring-back tones (answer tones) are expected to lead the way, along with mobile television and video services. Ring-back tones should overtake ringtones by 2010 to become the restricted largest revenue

source in the mobile entertainment category by 2010, IDC reported.

“I’m surprised Apple hasn’t done more around ringtones. Right now, iPhone users can’t buy AT&T ringtones, which is rather curious. I have suggested that Apple has its own walled garden of composition, whether you will,” said Lewis Ward, an analyst at IDC. “Ringtones have been one of the success stories around mobile entertainment services in the past five years, growing from nothing to $1.2 billion in the U.S. that year.”

Apple is reportedly looking to add ringtones, ring-back tones and songs downloaded over-the-air directly from its iTunes Store by a cell phone broadband network. The music labels are reportedly arguing that hey should be paid more for an over-the-air download than a track bought by the Net.

Apple’s Direct Assault

“Some of these ringtones from the carriers can cost $2 or $3 per unit; it costs twice as much for…

Orginal post by Top Tech News