By SCOTT MORRISON
Google Inc. is preparing to roll out a music download service tied to its search engine later this year, followed by an online subscription service in 2011, according to people familiar with the Internet giant’s discussions with the music industry.
Google’s proposals are still vague, say these people, and it’s unclear whether it has struck any deals with record labels so far. But Google has been stepping up conversations about offering new music services tied to phones running its Android operating system along with the broader Web, said people who have been briefed on the talks. The launch of Google’s download music store is still months away, these people said.
The discussions come as Google has been pushing deeper into music. Last year, as a first step, the company began linking to partner websites like iLike and Pandora through its search engine, allowing people to stream songs with one click from its search page. Now, the company is looking to tie its own service to its search engine, too.
The discussions come as the Mountain View, Calif.-based search company has been ramping up on entertainment content. Google is also moving to add professional content on its YouTube video site, and is planning to roll out a digital bookstore this year.
The launch of a Google music store would heighten tensions with Apple Inc., whose iTunes store is the leading U.S. digital music seller. Apple also recently began selling digital books. The two Silicon Valley giants have been at odds since Google launched its Android mobile phone software, a direct challenge to Apple’s popular iPhone. Apple recently hit back with an advertising platform for its iPhone and iPad tablet that has terms Google says could limit competition.
Google and Apple declined to comment for this article.
Google’s push into music retailing is likely to be welcomed by music labels that are increasingly concerned about Apple’s dominant position among U.S. music retailers. Apple accounted for 28% of all music purchased by U.S. consumers in the first quarter, according to NPD Group.
The recording industry has long sought a counterweight to Apple’s growing clout, but rivals such as Amazon.com Inc. and Wal-Mart Stores Inc. remain far behind with about a 12% share each, according to NPD.
The first phase of Google’s music service is expected to be a Web store where users can buy and download tracks, music industry insiders said. It will be tied directly to Google’s search engine, so that people using Google.com to look for a particular group or song will be served a link to the company’s music store, according to people familiar with the talks.
These people also said the download store would be an “interim” step toward what is expected to be a more ambitious cloud-based subscription service compatible with mobile phones built with Google’s Android software. A cloud-based service would enable subscribers to stream music directly from the Internet to their mobile phones, so that users wouldn’t need to store music files on their devices. Google recently provided a glimpse of a Web-based music store within its Android Market, which sells apps for phones built with Google’s Android mobile software.
Apple in the past several months bought and then shut down online music service Lala.com, prompting widespread speculation it might also soon launch a new cloud-based version of its iTunes music store.
—Jessica E. Vascellaro contributed to this article.
Write to Scott Morrison at scott.morrison@dowjones.com