Google to Go After Apple With New Digital Music Service

Industry sources say search giant is in early stages of developing "cloud"-based service

June 22, 2010 4:42 PM ET

Google is in "very preliminary" talks with executives in the record business to launch a new music service to compete with Apple's dominant iTunes, according to a source at a major record label and recent media reports. Although The Wall Street Journal reported a service linked to Google's search engine could open by the end of this year, with a subscription service in early 2011, sources say it's pure speculation. "Maybe [they're] thinking, 'Look, iTunes won the online-music battle, but nobody has claimed the wireless one,' " says the major-label source. "They're going head-to-head with Apple and the iPhone. What better way to do it than with music?"

The new Google service, many predict, is likely to allow iTunes or Windows Media Player users to stream their entire online libraries to Android phones. So rather than transferring songs one-by-one from their computers to their phones, or subscribing to streaming services such as Rhapsody or Spotify, users will be able to access thousands of their own downloads via any player. "We think users are going to love this feature," the company's vice president of engineering, Vic Gundotra, said last month, during a demonstration at the Google I/O developers' conference. However, Google spokespeople wouldn't say when the feature would be available.

The idea of accessing music via "the cloud" — a sort of Internet-based storage locker — has been around since MP3.com tinkered with it more than a decade ago. Late last year, Apple purchased LaLa, a service allowing users to store their online music on a central website. But rather than opening a cloud-centered service, Apple closed LaLa with no explanation in late April. That could leave a competitive opening for Google.

"The key word is 'cloud.' Instead of [using] your old-fashioned Rhapsody, or even Spotify, where you can pick a song or an album to listen to and make some playlists, you're going to be able to upload all your music to remote servers — and access them through any doorway," says Aram Sinnreich, a music-industry analyst and managing partner for Radar Research. "And every 15 minutes Google inserts some audio ad." Still, the major-label source says Google has yet to hold serious talks with record labels over licensing their catalogs to any future service: "That is very compelling. It's potentially a huge market. But a lot has to happen."

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