This story has already been covered in today's Technology section but it's one of today's free Walll Street Journal stories and it has more information and speculation. The WSJ says:
Now Amazon, the world's No 1 online retailer, is in advanced talks with the four global music companies about a digital-music service with a range of features designed to set it apart. Among them: Amazon-branded portable music players, designed and built for the retailer, and a subscription service that would deeply discount and preload those devices with songs, not unlike mobile phones that are included with subscription plans as part of the deal.
Further on, it adds:
Among the manufacturers Amazon has mentioned as likely partners for a subsidized hardware offering is Samsung Electronics Co., whose flair for stylish design is raising hopes among music executives that the initiative could create a strong alternative to iPod. A representative at Samsung's headquarters in Seoul, South Korea, couldn't be reached for comment.
Comment: A subscription service would have some advantages over Apple's iTunes Music Store. For example, users need not worry about deleting their downloads accidentally -- Apple refuses to replace them, even though it knows you have downloaded them. Also. users can easily replace inferior quality downloads (ie almost all of them -- they're less than CD quality) when new hihger-bit-rate or lossless versions become available.