The service will supposedly provide both subscription-based and free ad-supported streaming music plans for Xbox 360, Windows 8 and Windows Phone users. Microsoft SkyDrive integration is also said to factor heavily into the service's functionality, allowing for synced playlists and music libraries across all supported devices.
These claims match an earlier report from last June, in which Bloomberg claimed that Xbox Music would launch with Spotify-like streaming options and cloud storage capabilities. Microsoft did state shortly thereafter that reports of it "launching a new music service on Xbox this fall are inaccurate," only to discontinue certain Zune services the following month.
Personally, all we care about is whether we'll be able to use this new service to watch Girls' Generation videos, regardless of when it actually comes out.