Apple has been widely rumored to be working on subscription based music streaming service for iOS devices. When Apple purchased LaLa, many believed that the company would introduce a streaming service. However, the purchase turned out to be to acquire talent to develop iTunes Match service.

Evad3rs released their ‘evasi0n’ unthethered jailbreak for iPhone5 on Tuesday and now 9to5Mac points us to hidden radio icons in iOS 6.1 release. Jailbreaking the iPad with evasi0n and then going through the files in Music.app revealed references to “radio button” with icons bearing resemblance to radio streaming icon in iTunes. Further, it was found that the button files are labeled with “buy” in the filename.

Many news publications like Bloomberg and WSJ previously reported on rumors about Apple working on Pandora competitor and cited music label licensing deals as being one of the hurdles being faced by the company. If those rumors are to be believed and with the hidden radio icons being revealed in iOS 6.1 is any indication then we could be seeing Apple announcing a new music subscription service soon.

Apple could be looking at allowing users to stream music tailored to their taste using the genius data and then integrating it with the iTunes store to allow purchase of favourite tracks. iTunes music store was recently made available in 56 new countries and the Cupertino, Calif. based company could now be looking at launching a music streaming service.

Online music streaming services such as Spotify, rdio, and Pandora are dominating streaming music space, Apple has been rumored to be working on its own radio service similar to Pandora’s, now being called “iRadio” for lack of a better name. These rumors have been circulating around the web for some weeks now. Now in an interview with AllThingsD, Beats CEO and Interscope Chairman, Jimmy Iovine revealed that he had pitched the idea of a music subscription service to Steve Jobs in 2003.

Iovine was close friends with Jobs, having worked with him on multiple products and promotions with artists such as 50 Cent, Bono of U2, Mick Jagger, and even launching a special iPod for U2. Iovine says he is currently working on a music subscription service, not revealing any specific details about the project or what it is going to consist of.

In 2002, 2003, Doug [Morris, former Universal Music head] asked me to go up to Apple and see Steve. So I met him and we hit it off right away. We were really close. We did some great marketing stuff together: 50 Cent, Bono, Jagger, stuff for the iPod — we did a lot of stuff together.

But I was always trying to push Steve into subscription. And he wasn’t keen on it right away. [Beats co-founder] Luke Wood and I spent about three years trying to talk him into it. He was there, not there … he didn’t want to pay the record companies enough. He felt that they would come down, eventually.

I don’t know what [Apple media head] Eddy Cue would say — I’m seeing him soon — but I think in the end Steve was feeling it, but the economics…he wanted to pay the labels [for subscriptions], but [the fees were] not going to be acceptable to them.

Iovine did reveal that his service would be similar to Pandora, in that it would not provide users access to entire albums and artists as Spotify does and would aggregate music based on user’s preferences. Apple’s “iRadio” is expected to be similar to Iovine’s approach, although it could be possible that Iovine is working with Apple to help create the company’s music subscription service as the two have worked together in the past. Iovine was mentioned several times in Job’s biography, “Steve Jobs” by Walter Isaacson in which Jobs himself talks about his friendship with the Beats Electronics chief.

{Via MacRumors}

Last month we reported that LaLa would be shutting down their service and today the service was finally discontinued. This has lead to further speculation that Apple might introduce its new music subscription service during WWDC 2010. Millions of users already use iTunes to purchase music which makes it very easy for Apple to market their subscription based service.

Apple could also be looking at improving the iTunes experience by allowing users to stream the full song and then decide if they would like to buy it. The new iTunes music streaming service could also use the data from genius playlist and recommendations and stream music from an endless collection of artists you like.

The DOJ is currently investigating Apple’s music services but we could still see a demo of this new streaming service during the WWDC keynote.