According to CNET, a source familiar with the situation says that Google is in talks with the popular European music streaming service, Spotify, to help power their Android music service. This comes just after news that Apple is already finishing up its own music streaming digital locker ahead of Google's. Both companies have been stalled by license negotiations with record labels.
Additionally, Google has not been able to make up its mind on what direction to take with its music strategy. They initially wanted an iTunes-like store with an online music locker to store and share the music you've already purchased, but then they began considering a subscription model. This has made it difficult to reach any agreements with the record companies. Apple, on the other hand, has already signed licensing deals with two labels.
Amazon has actually beat both companies with the launch of its Amazon Cloud Player last month. However, their service launched fast partly because of their decision to forgo the licensing process claiming that their service was simply online storage for music but did not actually sell any music.
Google's music service seems ready to go on the technical side, but they're indecisiveness may lie in wanting to push out a true game changer of a service. Considering that Spotify is facing its own licensing hurdles in trying to break into the U.S. Market, it's not certain how partnering up will help boost Google's own attempt. But Spotify is more experienced in the music arena and has a unique model that enables it to offer limited free music that may help Google differentiate and compete against Apple's iTunes and soon to come music locker.