Microsoft (NSDQ: MSFT) wants to reintroduce actual music to its UK MSN Music site, filling the gap created in April by the demise of its white-label powered downloads store.

Microsoft told us: “In the coming months, MSN is planning to launch a new music streaming service in beta via its Music channel. At this stage, we won’t be confirming the detail behind this but more information will be available soon and will be communicated in due course.” MSN is understood to be targeting end of July to launch. Though Telegraph.co.uk reports a tie-in with Xbox 360 and Zune, we understand no such moves are planned.

The MSN Music section had offered music downloads for purchase through a white-label store operated by Nokia’s OD2 arm, but the handset maker closed the service - which was founded by Peter Gabriel and bought from Loudeye for $60 million in 2006 - in April, also knocking out music stores operated by Tiscali, Virgin Media (NSDQ: VMED) and others.

Now that the market is moving on from downloads to streaming, it’s only logical a new MSN Music channel would look to offer both. MSN UK executive producer Peter Bale tells Telegraph.co.uk: “It will be a similar principle to Spotify but we are still examining how the business model will work. We are looking at how other similar businesses have structured their business models and trying to figure out what will work best for both consumer and Microsoft.”

It’s thought the replacement would only operate in the UK for now. Music downloads have continued to operate on MSN Music in the US, powered by the Zune marketplace.

• Nokia Stepping Down B2B Music Stores; Hits Tiscali, MSN, Virgin
• Research: Teen Streamers Tip Music Away From P2P
• MSN Music Killing Download Service Nov. 14; Will Push Zune, Rhapsody Instead