The LA Times is claiming that the new iCloud service will not be free. In fact, they will charge both a yearly subscription and display advertising.

The company plans to eventually charge a subscription fee, about $25 a year, for the service. Apple would also sell advertising around its iCloud service.

The agreements, finalized this week, call for Apple to share 30% of any revenue from iCloud’s music service with record labels, as well as 12% with music publishers holding the songwriting rights. Apple is expected to keep the remaining 58%, said people knowledgeable with the terms.

They also claim that they have signed up Universal Music Group to the service which was the last of the major music labels.

The report also claims that initially it will be used to music streaming but could evolve over time to movies and TV shows as well.

Check out the iCloud icon here and expect full details at WWDC 2011 next week.

(via LA Times)