Microsoft, Apple and Digital Music Cooperation?

According to Reuters, Apple and Microsoft are reportedly in negotiations "aimed at meeting the music industry's goal of compatibility among competing digital music devices by 2005."

Current digital music downloads exist in two primary formats - AAC and WMA - neither of which is inter-compatible. According to the article, current negotiations presently revolve around the ability to convert from one DRM format to another, preserving the digital rights management. Unfortunately, this may be both time consuming and lossy (potential loss of audio quality).