Spotify's biggest battle is no longer with Taylor Swift.
Apple is working with headphone maker Beats to launch a new subscription-based music service to rival the highly popular Spotify, the New York Times reported Thursday, citing people briefed on the company's plans. Apple acquired Beats for $3 billion last May,
The new streaming service will overhaul Apple's iTunes Radio, which failed to achieve mainstream success, and Beats Music, Beats' streaming service that has challenged Spotify in service quality, but not in subscription numbers. Heavily involved in the project are Trent Reznor, the Nine Inch Nails frontman and former Beats exec, in addition to Beats' cofounders, hip hop producer Dr. Dre and record label exec Jimmy Iovine.
Unlike Spotify, Apple will not offer a free tier in its streaming service. The paid-only nature will likely ease music executives' concerns that free music discourages users from purchasing subscriptions. The decision may also appeal to artists who have voiced their opposition to free streaming, including Taylor Swift, Garth Brooks and The Black Keys, all of whom are not on Spotify.
Sources also told the Times that Apple, once considered the undisputed leader in music sales with iTunes, had recently failed to convince record labels to agree to a subscription cost of $8 per month, which would be $2 less than the price of Spotify's paid tier.
Apple has kept its plans for Beats secret since the acquisition, though music industry experts have long speculated that CEO Tim Cook planned to use Beats' talent to revamp Apple's music platform offerings. Though TechCrunch reported in September that Beats would be discontinued and folded into Apple, Apple soon denied the claims, but provided no further information.
Read next: Streaming Music Showdown: Spotify vs. Beats