Google also reportedly hired on music technology lawyer Elizabeth Moody back in July to take the reigns of the project. Moody is supposedly in close negotiations with the four big record labels, however Google as a company has not started official negotiations with the actual music publishers-- they hold a different set of rights.
If I purchase the rights to play a song to myself, why can't I store it on a cloud service where I can access it from anywhere? I don't understand why Google needs the record labels' buy-in, but it bothers me to think that EMI, Sony, WB, or Universal will get a nickel every time I stream a song to my phone that I already paid them for.
Still, the government seems to be looking the other way when it comes to Google and fair-use. I mean, why hasn't the government gone after studios for banning their websites from the GoogleTV browser? I mean, what's next, you can only access Hulu from IE? Something tells me if Microsoft paid Hulu for that privilege, THEN the government would step in, but demanding the same payment from Google isn't criminal extortion?
A similar service has existed for quite a while in the form of mp3tunes.com. Which is owned by the company that brought you linspire (Acquired by Xandros) and gizmo (acquired by google). Mp3tunes was sued for allowing end-users to store their music in the cloud, the service is still around but I'm not sure how many people actually are aware of its existence and still use it. It seems development of the platform has not progressed much. I still have an account there but I don't use it much anymore.