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Andy Rubin, vice president of engineering at Google, has been been in discussions with music labels about a download store and digital song locker that would allow mobile users to play music no matter where they are, according to people familiar with the matter.

Negotiations have centered on securing licenses that would allow Google to offer services for browsers and the Android operating system. Rubin hopes the talks can be concluded by the time it launches its next Android update, codenamed "Gingerbread," due out sometime in the fourth quarter of this year.

"Finally here's an entity with the reach, resources and wherewithal to take on iTunes as a formidable competitor by tying it into search and Android mobile platform," said a label executive who asked to remain anonymous. "What you'll have is a very powerful player in the market that's good for the music business."

Music companies believe that Google will be an effective rival against Apple, whose iTunes service currently controls more than 80 percent of digital music sales. While record companies receive 70 percent of the revenue from iTunes, they have been disgruntled with Apple's control over issues such as pricing and digital formats. Labels are also eager to tap into consumer preference data that Google has collected.

A music service would be a key part of Google's foray into delivering digital content, including e-books, movies and television shows, and would put the company into direct competition with Apple. The Internet search giant also sees digital music as a major part of a successful strategy for Android.

Google has not signed any licensing deals with major labels yet, people familiar with the matter said, but the music industry is still excited about the possible competition with iTunes. With Android devices outpacing iPhone sales, Google is in a position to bring over millions of additional customers.