Apple is working with the four largest record labels to stimulate digital sales of albums by bundling a new interactive booklet, sleeve notes and other interactive features with music downloads, in a move it hopes will change buying trends on its online iTunes store.

It would provide an alternative way to experience digital music than just feeding tracks into the iTunes player or an iPod, and would presumably be designed to encourage music fans to buy full albums rather than pick and choose single tracks.

Whether people who buy the interactive album product would also be able to also add songs to their iTunes and iPod library too isn’t clear, though it would be a bit rubbish if they couldn’t. Though for portability, rumour has it the new interactive albums will work on the much mooted new Apple touch-screen mini tablet-sized portable computer thing that is reportedly being prepared for market. Presumably some mini interactive album app could also be designed for the iPhone too.

According to the FT, labels are already talking to Apple about being involved in the new digital album format, and the first releases could come as soon as September. Meanwhile, according to CNET, some in the record companies are a bit pissed off that Apple insiders are spinning the new digital product as their idea, because several label execs have been touting such a product for a couple of years, initially getting a lukewarm response from the computer firm.

The talks come as Apple is separately racing to offer a portable, full-featured, tablet-sized computer in time for the Christmas shopping season, in what the entertainment industry hopes will be a new revolution. The device could be launched alongside the new content deals, including those aimed at stimulating sales of CD-length music, according to people briefed on the project.

Physical album sales have fallen sharply as music retailing has evolved from CD album purchases in retail outlets to digital downloads of songs from online stores. Although consumers continue to purchase large amounts of digital music, they are buying individual tracks rather than higher-margin albums.

Apple is working with EMI, Sony Music, Warner Music and Universal Music Group, on a project the company has codenamed “Cocktail”, according to four people familiar with the situation.

The labels and Apple are working towards a September launch date for the project, which aims to boost interest in albums by bundling liner notes and video clips with the music. “It’s all about re-creating the heyday of the album when you would sit around with your friends looking at the artwork, while you listened to the music,” said one executive familiar with the plans.

Apple wants to make bigger purchases more compelling by creating a new type of interactive album material, including photos, lyric sheets and liner notes that allow users to click through to items that they find most interesting. Consumers would be able to play songs directly from the interactive book without clicking back into Apple’s iTunes software, executives said.

“It’s not just a bunch of PDFs,” said one executive. “There’s real engagement with the ancillary stuff.”

The music companies declined to comment.