As reported earlier this year, Facebook has been rumored to announce an online music service to compete with iTunes and MySpace in the near future.

This just in: the “Facebook Music” platform will serve as the social networking giants first step into the music space.

The new platform is set to be announced at ad:tech in New York City next week. Leading up to this announcement Facebook has been holding top-secret meetings with high-level representatives at each of the four major music labels.

Here’s how it works:

Major and independent label artists and will register their sub-domain name through Facebook. Like “www.facebook.com/insertbandnamehere” for example.

On this page Facebook users will be allowed to become “fans” of the artist and connect to the media hosted on the “artist page.”

In the first generation of Facebook Music “fans” will be allowed to listen to artist’s music, watch videos, upload pictures, add music to their page, receive tour information and interact with other fans. Online music moguls, be warned.

Future generations will come quickly and allow unprecedented targeted marketing, ad buys and media promotion. Facebook is developing artist specific sales widgets to allow for music sales through the site as well.

This is only the first generation of Facebook Music and Zuckerberg has stated that users can expect future developments that include a head-on assault on iTunes and MTV, possible intergration with the iLike application and the ultimate goal being to consume MySpace Music – Tom Anderson’s bread and butter.