As smart a businessman as Jay-Z has shown himself to be over the years, it's not surprising that he would have a new venture lined up in the wake of his decision to leave Def Jam as president late last month.

But widespread reports have the rapper-mogul working on a deal that could turn the music industry on its ear. Jay-Z is reportedly working on a deal to join Apple to run a record label that would allow the iTunes-iPod juggernaut to circumvent the record labels in digital download sales.

Several media outlets reported the deal today, and tech blog The Boy Genius Report said it confirmed the move today.

The move would likely focus on artists with an already established fan base and would come on the heels of innovative moves by Radiohead and Madonna. The former set up a name-your-price download store for its latest album, In Rainbows, while the latter inked a $120 million deal with concert promotion giant Live Nation, in which the parties will share revenue from album sales, concert proceeds, merchandising, and a range of other revenue sources.

Nothing is official between Jay-Z and Apple, and the rapper last month decried iTunes' sale of individual singles as opposed to only selling full albums in the run up to the release of his acclaimed December 2007 album, American Gangster.

Another obstacle is Jay-Z's current recording contract with Def Jam. Late last month, Jay-Z ended months of speculation by announcing that he was stepping down as president of Def Jam Recordings after a three-year run as an executive with the company. But he remains under contract for two more albums as an artist.

Def Jam is owned by Universal Music Group, whose CEO, Doug Morris, has butted heads with Steve Jobs in recent months over the terms by which Apple's iTunes sells music from UMG artists.

Morris reportedly has plans to launch a UMG-controlled digital store, as he has tired of Apple's dominance of the digital music world and the clout the company has gained as a result in dictating contract terms. Whether or not Morris would attempt to make Jay-Z's move to Apple as an executive difficult is unclear.

But despite those obstacles, the digital media giant isn't prevented from moving into the music business in the wake of its settlement agreement last year with Apple Corps, the Beatles' music company. The deal, which settled Apple Corps' claims that Apple was violating a previous settlement agreement that kept it from being in the music business, does not prevent Apple from getting into the music business in the future.

And Jay-Z has himself been vocal about looking into new business models. In an interview with Billboard last year, the rapper said his negotiations with Def Jam wouldn't be about money but more about progressive thinking in terms of selling music.

"It's not the music; people ingest music the same way. It's just that the model of selling CDs has changed," Jay-Z said. "So doing things the typical way is not in the best interests of anyone and not exciting for me. My whole thing is, how do we invest in the future? If everyone is committed to doing that, then I'm sure there's a deal to be made."

In addition to new potential opportunities in the music business, Jay-Z has a number of ventures lined up. He is expanding his 40/40 sports-based nightclub beyond New York City, owns a piece of the New Jersey Nets, and is now planning to launch a high-end hotel chain in Manhattan, dubbed the J Hotel.