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Exclusive: Google readies its Spotify competitor with Universal and Sony now on board

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By signing the three largest record labels, it's likely we'll see Google roll out its new subscription music services at I /O

Google Music stock 1024
Google Music stock 1024

Google will unveil new subscription music services tomorrow at the Google I/O conference, sources close to the company said. Google has now signed separate licensing deals with Universal Music Group and Sony Music Entertainment for both YouTube and Google Play, setting the stage for such an announcement, music industry sources told The Verge.

Google plans to add separate music subscription services to YouTube and Google Play, the entertainment hub for the Android operating system. Earlier this year, Fortune magazine reported that Google had already struck similar licensing agreements with Warner Music Group, the smallest of the top three record labels. But landing Universal Music and Sony gives Google access to the two largest record companies, home to such acts as Bob Dylan, Alicia Keys, Lil Wayne, Rihanna, and Jay-Z. Spokespeople from Sony and Universal declined to comment.

Google comes to these negotiations as a powerful player in music When Google rolls out the new services tomorrow at I/O, it will mean that it gets the jump on Apple, which is also trying to launch a new streaming-music service. According to reports, Google's subscription services would resemble Spotify, and offer on-demand songs that would be streamed to their PCs and mobile devices. In contrast, Apple is working on an online radio service that is said to be more akin to Pandora, a service that plays songs at random similar to traditional radio.

Google comes to these negotiations as a powerful player in music. While Google Play is still a relatively new service, insiders say YouTube is a juggernaut. The user-generated video site sees more than 800 million unique visitors a month and music videos are among the most popular fare.

When Google rolls out the new services tomorrow at I/O, it will get the jump on Apple Vivendi, Universal Music's parent company, reported first quarter earnings today, and said that revenue was up 13 percent compared to the same period a year earlier. Digital music sales have now surpassed physical at Universal, with the split being 54 percent to 46 percent, respectively. The addition of Universal's catalog, along with Sony's offerings, could allow the forthcoming Google product to have a significant impact on competitors Spotify and Rdio.

Update: The New York Times is reporting that Google’s Spotify killer won't offer a free tier for its streaming service. The paper said it wasn't clear how much Google would charge, however. Most subscription music services charge about $10 per month. The Wall Street Journal is reporting that as part of its negotiations for music subscription, YouTube is trying to get some kind of an audio-only license.