Google strikes deal with Warner Music for streaming services

Google, which is trying to get into the music streaming business this summer, today struck a deal with Warner Music Group, according to a source familiar with the negotiations. The deal, first reported by Billboard, gives Google rights for two services it's working on -- one that's part of Google's Android music platform, Google Play, and the other that's part of YouTube.

A Warner Music spokesperson declined to comment. YouTube didn't immediately respond to requests for comment, but earlier in the day, in response to an article in Fortune, confirmed that it was looking at subscription music services.

This is just one step for Google, as it tries to go to battle with streaming services like Spotify and turn YouTube into a more powerful and lucrative music service. YouTube, which has 800 million unique monthly users, is already the largest music service in existence, and for now it only makes money via ads.

Google is still talking with execs at both Universal Music Group and Sony Music, according to people familiar with the negotiations. Reports surfaced last month that Google was looking at launching streaming services. Still unclear is what Google's service will look like, but given the name brand of YouTube, it could provide a huge boost to the emerging streaming music business.

There is an unusual optimism around digital music these days. Last week, the International Federation of the Phonographic Industry, released its annual report, showing that the industry overall grew for the first time since 1999 -- albeit by just 0.3 percent. The standout figure, however, was with digital. Digital revenue saw accelerating growth for the second year running, up 9 percent, as all formats -- downloads, subscriptions, and ad-supported businesses -- are on the rise. In other words, it's not just about iTunes anymore.

A point Google is going to try to stress with its planned services.