The service will launch with only 1000 audio tracks but will also include about 300 TV episodes and radio music programs including Radio 1's "Live Lounge."
BBC says they hope to offer up to 50,000 audio tracks and 3000 hours of video while using the full BBC archive.
The broadcaster has a beta launch set for November with a full rollout expected by January.
Differentiating the new service from, lets say iTunes, is that you can stream the entire video you want to watch for free, only with a few ads in the way. It is basically like Hulu except that you can pay to purchase the videos before and after you have watched the file of your choosing. Making it even better, the files are DRM-free if you purchase them.
Analysts expect half of the revenue for the service to come from subscriptions with the other half coming from advertising.
A BBC Worldwide spokesman added: "We're exploring a range of opportunities around direct to consumer websites and the utilisation of the BBC music archive. At present, no launches have been approved".
There was no word on price yet.