Yahoo is said to be in talks with record labels on offering DRM free music to customers.

The options discussed by Yahoo are to sell DRM free music, or offer it ad supported and free to.

According to an AP report, the talks took place last month, but are still at a preliminary stage with Yahoo still working out details. Yahoo has confirmed the talks, but not the details of them.

Yahoo offering DRM free music isn’t ground shaking given Amazon already does and others are headed in this direction. Offering that DRM free music for free however is a big step forward towards the inevitable march to free. It will be interesting to see how Yahoo implements monetization strategies if they go down this path, and how it will be received. For example, will users tolerate advertising in the download itself?