Google is well on its way to building a music service, a source has confirmed, and is preparing to pay the record labels tens of millions of dollars so they'll sign off on it.

      For now, Google is focusing on a music locker that will let users store music files that they already own in the cloud, then stream that music to Android phones and other devices. An all-you-can-eat subscription service like Spotify might come later.

      Google hired music-technology lawyer Elizabeth Moody in July to lead the charge, and Moody has been in close negotiations with the big four record labels to convince them to support a locker service. Historically, music companies have been opposed to music lockers, and have filed lawsuits against pioneers in the space like MP3tunes and Lala.

      Apple beat Google to acquire Lala in December 2009 and has been trying to relaunch that company's music locker service, but has had a hard time negotiating with content owners, according to reports.

      But Apple already dominates digital music with the iTunes download store, so it's not feeling much urgency. Google only offers playable samples in search results, and is desperate to leapfrog Apple with some sort of mobile music service. Hence, the willingness to pony up.

      Google has not really started to negotiate with music publishers, who own a different set of rights for most music recordings--part of the insane complexity of music licensing. That will increase costs further.

      This source also said that Google was considering buying a subscription-based all-you-can-eat streaming music service like Spotify or Rhapsody, but the deal was scuttled by internal politicking: at least three groups were fighting for control of Google Music and couldn't agree on how to proceed.

      Look for Google Music to launch next year.

Source from SFGate

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