NOW THAT JAY Z IS A FREE AGENT, RUMORS FLY AS TO WHERE HE MIGHT GO NEXT!

Jay-Z may be a free agent for now, but he's in talks to cut a deal with WMG/Atlantic that could make him one of the richest and most powerful men in music.

A well-placed industry source tells us that Jay - who recently left Def Jam as a recording artist (he served as its president from 2004-2007) - has been taking top-secret meetings with his old pals and former managers Lyor Cohen and Kevin Liles. Topics of the hush-hush conversations have included giving Jay his own record label at WMG, tentatively to be called the Carter Music Group.

"Jay knows Lyor and Kevin from back when they all worked together at Def Jam, and he obviously wants to work something out with his friends," says our insider. "He wants to get the dream team back together. There have been a few whiffs of a reunion in the past, but only now - and very privately - is something finally starting to happen."

Our source adds, "This is big in hip hop. These are three of the most powerful men in music, who might be working together, and there's no question the success they'll have as a team will be huge."

WMG Vice President Cohen and Executive Vice President Liles also attempted to convince Jay to bring his Roc Nation label - which is part of the reported $150 million deal he cut with Live Nation - to WMG. Jay, however, has chosen to release his much-anticipated 15th album, "The Blueprint 3," with Live Nation in the fall.

"Jay's deal with Live Nation is massive," says another music-biz insider. "But if he were to cut a deal with WMG/Atlantic, he'd make even more headlines. Jay-Z, Lyor Cohen and Kevin Liles are all brand names. They're the industry's heavy hitters, and the combination would bring them a lot of attention. They would be unstoppable. Jay himself is the most successful rapper-turned-businessman out there."

Jay-Z (real name Shawn Carter) is a force to be reckoned with on his own. He reportedly bought himself out of his contractual obligations with Def Jam/Universal for a cool $5 million.

A rep at WMG would not comment; Jay-Z's team didn't return calls.