According to FORTUNE, the upcoming 3G iPhone will be discounted by AT&T to bring the price of the device down to $200.

Citing a "person familiar with the strategy," AT&T is preparing to subsidize $200 of the cost of a new iPhone for customers who sign two-year contracts.

Additionally, they say the new iPhone will be 2.5mm thinner than the original and will have a built-in GPS chip for navigation and other location-based services.

The New York Times' Bits Blog sees several holes in this rumor, especially the claim that the subsidized iPhone would be offered in AT&T stores exclusively, and not Apple stores. Still, it's an inevitable part of Apple's strategy to drastically lower the iPhone's price to bring sales closer to critical mass, with or without any fabled "person" to provide the info.

[FORTUNE via Engadget Mobile]

ICO Global Communications will be launching its G1 satellite from Cape Canaveral today.

It's not only the largest satellite ever launched by an Atlas rocket, but the ICO G1 is one of the largest commercial satellites ever built and is specifically designed to deliver signals to mobile and portable devices.

If the launch is successful, ICO will be the first mobile satellite services provider to become operational, and the first to deploy DVB-SH (digital video broadcast - satellite-to-handheld) technology in the United States.

There will be a live webcast of the launch starting at 3:40pm ET - the launch window is from 4:12pm - 5:12pm EST - so check it out. If the launch slips, they'll start it up again tomorrow at around the same time.

Slacker has finalized publishing agreements with major music labels so it now "officially" has the content rights allowing users of its online service to transfer songs onto Slacker Portable Radio Players.

The publishing license agreements, which were completed prior to the availability of Slacker Portables, also enable Slacker Premium Service customers to transfer songs and replay them whenever they want.

EMI Music Publishing, Sony/ATV Music Publishing, Universal Music Publishing Group and Warner/Chappell Music are all working with Slacker radio. They even were kind enough to throw in some quotes for the press release, so you know they're especially happy about this deal. (And, I suppose, anything that helps chip away at Apple's digital music dominance will make the RIAA happy nowadays.)

Music social network Imeem has acquired Snocap, the struggling digital rights company founded by Napster creator Shawn Fanning.

Terms of the deal were not disclosed, though its believed to be less than $5 million. That's a ridiculous discount to the $25 million that investors (including Morgenthaler Ventures, WaldenVC, and Court Square Ventures) sunk into Snocap.

Imeem, which uses Snocap technology, is gaining the firm's content identification technology and a digital registry, as well as its COO. Snocap's CEO Rusty Rueff is moving on.

Snocap's technology matches digital music to its database of 7 million songs, which then lets Imeem figure out how to allocate portions of its advertising revenues to the music companies who own the copyrights to the songs.

Snocap has been on the chopping block for some time, so it's not necessarily indicative of a massive downward trend. But it's another example of how the business model for digital music - even those that are fairly useful - still has yet to be worked out. And why some of these artificially bloated VC-funded companies haven't quite figured out that whole "sustainable" piece yet.

I'm not saying that Internet Radio isn't a threat to the big-bad broadcast infrastructure. Of course it is, and a looming one at that. But many of these companies haven't quite discovered the business model yet.

And there's still plenty of opportunity to get in on the action.

[TechCrunch, paidContent]

When the FlyTunes service was first unveiled at CES, it had only 50 channels to offer users. Now, a few months later, FlyTunes has received an injection of new content bringing its number of channels to more than 160 channels consisting of new sports, talk, weather and a myriad of music genres.

The free service (which pre-loads Internet Radio content onto your iPhone or iPod Touch) now includes programming from Radio Paradise, SmoothJazz.com, RauteMusik.fm, and 53 music channels from 181.fm.

In the talk category, FlyTunes has added on NPR - yes, NPR - as well as sports content from TheScore.com, and even local weather in the top 15 U.S. markets.

FlyTunes says they've signed on "hundreds of thousands" of users since their January launch, and that the average FlyTunes iPhone user listens for about 8-hours per month. Not too shabby since they're still in their infancy. And now with the channel count rivaling that of either satellite radio service, iPhone/iPod owners have yet another reason why they don't need Sirius or XM.

[FlyTunes]

The rumors that MySpace is teaming up with the big labels are looking to be true. Reuters is reporting that MySpace will unveil a joint music venture with at least three major music companies within 5 days.

News Corp (which owns MySpace), Sony BMG, Universal Music Group, and Warner Music Group will each have a stake in the venture, say Reuters sources.

TechCrunch has confirmed through their own sources that MySpace has settled their lawsuit with Universal. Meanwhile, Silicon Alley Insider has more details in that Universal will receive "a 'huge' cash payment in return for settling the 2006 lawsuit, perhaps in the $100 million range."

"It's really creating a robust monetization component to MySpace and having a focused music effort that could be the MTV of a new generation," said a music industry executive to Reuters who asked not to be identified before the deal is formally announced.

MySpace to become the "new MTV"? As long as MySpace doesn't lose its way (like MTV did), this could pose to be a very significant development in the world of music discovery for future generations. It's up to the execs over at Sirius and XM (and the entire radio industry in general) to make sure they're part of that movement.

[Reuters, TechCrunch, SAI]

UPDATE: PaidContent has more details on the actual service:

• Downloads will be DRM-free
• Video/audio streaming will be ad-supported
• Store will include merchandise and ticketing
• With 30 million uniques monthly and 5 million bands on the site "we're not starting from scratch, it's a big heads start."
• Not just for major music companies, but will be ways for unsigned artists to sign on.
• There will be a mobile content solution as well. (important)
• Pricing? Competitive with iPod? MySpace knows they're playing to an iPod-dominated base. DeWolfe: "Our intent is to make this content very portable and to give our users access to the content in the format that they want. To whatever extent we can leverage our environment via iPods, we'll look to do that."

This is very significant in terms of music industry. Remember, this is a joint venture with the three largest record labels (and possibly soon to include EMI, that's up to EMI to decide apparently). Whatever opportunities the RIAA feels they missed out on with online music - be it the original Napster, or now Apple iTunes - they're going to want to make up ground a lot of lost ground. This will be their avenue.