Google (Nasdaq: GOOG) is in the throes of working out a deal with major record labels to build a subscription-based music store.

A report by Billboard says Google has been circulating a proposal among record labels offering users a two-fold plan that includes a cloud-based locker for $25 a year where users can store their music and a conventional digital music store to buy tracks from.

The model differs from Apple (Nasdaq: AAPL) iTunes in that it runs entirely through the web-browser and offers a cloud-based store.

The cloud-based digital music store will allow users to stream or download music directly to any web-browser without a charge. Users also have the option of storing some music bought through its digital music store in the cloud-based locker or to load it on a device.

The new service will also grant users the right to listen to a complete track once, and then only 30-second snippets, before buying a track -- a feature loaned from Lala.

The differentiating factor for Google's Music store -- if Billboard reports are true -- lies in its ability to use the digital online music store in conjunction with the cloud store. Users can directly buy and store the music in the cloud-locker and can access music from any internet-based device. Also when they are not online they can still download the music to a mobile app.http:/img.ibtimes.com/www/site/us/images/1px.gif

The cloud-locker will also be overlaid with a social-network feature whereby users can exercise the option of transferring their playlists to fellow subscribers, who in turn can listen to the complete track once.

Google's cloud-locker will also scan a subscriber's hard-drive and will upload any track licensed by Google.

According to the Billboard report, sources suggest that Google is offering 50-50 subscription-revenue sharing with the master rights holders and a 10.5 percent share with music publishers. It is also negotiating a three-year licensing agreement with the publishers.

However, what Google lacks in comparison to Apple iTunes is music label agreements and an ecosystem of devices like iPod Touch and Nano.

But if Google is able to iron-out an agreement with music labels, Google can be a formidable opponent to iTunes. With a cloud-based, device-agnostic Google Music, Google can garner volumes to slash prices to compete against Apple.

Ibtimes

International Business Times, The Global Business News Leader

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