Virgin Digital is developing a digital jukebox and online-music store with music delivery company MusicNet in the US.
The service – the newest branch of Richard Branson's empire – is expected to be available by the end of August.
Virgin Digital president Zack Zalon told Reuters: "Virgin Digital will work on mobile phones, handheld devices and other consumer electronics gear. The product will include a jukebox, the ability to burn, rip and encode songs onto CDs, access to Virgin's digital music club and Virgin Internet radio stations.
"We're not releasing the pricing information but it'll be hyper-competitive."
The service will support Microsoft's Windows Media Audio, which isn't supported by Apple's iPod. Virgin last year started stocking Apple's iPod in its Virgin Megastore outlets in the UK.
The jukebox software will be available for download and on a CD that will be available in Virgin record stores.