Google Plans Music Service to Challenge ITunes

Google is planning to launch a music download service that is tied to its search engine later this year, followed by a cloud-based subscription service for smartphones running its Android operating system in 2011.

The Mountain View, Calif.-based company is expected to release a Web service where people can buy and download songs, according to people familiar with the situation. The online store will be tied directly to its search engine, so that results for a particular artist or song from would be linked to the music store.

These people also said Google’s online store would be a preliminary step toward a more ambitious cloud-based subscription service. The service would allow smartphones running its Android software to stream music directly from the Internet, so that users wouldn’t need to save songs on their devices.

But the launch of Google’s music store is still months away. In the meantime, the company has been discussing terms with the record companies and proposals are still vague.

By striking a deal, the Internet search giant hopes to push deeper into online music retailing. Earlier last year, as an interim step, the company started to link to partner sites like iLike and Pandora from its search page, allowing people to listen to songs with one click.

Google’s move would be welcomed by a music industry that is already concerned about Apple’s growing clout among retailers. Record executives have long sought a counterweight to Apple’s dominant position, but rivals such as and Wal-Mart remain far behind.

The introduction of a Google music store would increase tensions with Apple, whose iTunes store is the leading digital music retailer. The two Silicon Valley titans have been at odds since Google released its Android software, a direct challenge to the iPhone. Apple recently struck back with iAd, an advertising platform for its iPhone and iPad, which has policies Google claims restricts competition.

In May, Apple shut down online music service, prompting analysts to speculate that the company may also launch a cloud-based version of its iTunes music store.

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