Google Plotting Digital Music Store to Rival Amazon and Apple

With the race for digital media supremacy continuing to accelerate, Google (NASDAQ:GOOG) is reportedly planning to roll out a music retail platform to rival established efforts from Apple (NASDAQ:AAPL) and Amazon.com.

Citing confirmation from numerous music industry executives speaking on condition of anonymity, The New York Times reports Google is deep in talks with the major record labels to expand its cloud-based Music Beta streaming service and open a MP3 store. The Wall Street Journal states only EMI Group is close to sealing a deal, with Universal Music Group, Sony Music Entertainment and Warner Music Group still in negotiations but far from finalizing terms. A Google spokesperson declined comment, and the labels also had no comment.

Google first introduced Music Beta during its annual I/O developer conference in May 2011. The service enables consumers to upload and store their digital music collections via the web for streaming playback across Flash-enabled connected devices including Android smartphones and tablets as well as the desktop. Users may store as many as 20,000 songs for free--the service syncs activity on different devices, meaning that playlists created on the user's smartphone will automatically show up on their computers.

Like Amazon.com's Cloud Drive initiative introduced in late March, Music Beta by Google arrived without record label licensing agreements, meaning consumers are blocked from sharing songs with friends or purchasing premium downloads from Google. "

A couple of major labels were not as collaborative and frankly were demanding a set of business terms that were unreasonable and did not allow us to build a product or a business on a sustainable business," Android director of digital content Jamie Rosenberg said at I/O 2011. "So we're not necessarily relying on the partnerships that have proven difficult."

Major label executives have indicated that Music Beta talks broke down, in part, because they felt Google failed to properly address their piracy concerns. The New York Times states that Google's expanded plans still leave doubts about content security. "We want to make sure [Music Beta's web-based music storage] locker doesn't become a bastion of piracy," one senior-level label exec said.

News of Google's digital music ambitions follows days after Apple released its new iOS 5 mobile operating system. The update includes support for the new iTunes in the Cloud, which enables consumers to download previously purchased iTunes music to all iOS devices at no additional cost, as well as the forthcoming iTunes Match, which essentially mirrors music files downloaded from sources other than Apple's storefront with a 256 kbps AAC DRM-free version culled from the iTunes Store.

Apple secured all the necessary label licenses prior to announcing iTunes Match. Services like Music Beta, which operate without the proper licensing, require that consumers upload each song to the cloud individually, a process that can span hours or even days in the case of more extensive digital music libraries.