From today’s Digital Music News:

Sources Point to Discussions Between Google, Napster

Speculation has recently focused on a possible digital music store play from Google, especially following the release of Google Video. Now, well-placed sources have pointed Digital Music News to discussions between the search giant and Napster, though the sources were unable to share additional details. Meanwhile, sources to the New York Post offered the possibility that “Google is considering an extensive alliance with Napster, which could include an outright acquisition”. Earlier, sources from within Napster told Digital Music News that the company is considering a sale or liquidation, though a Napster representative denied those claims. Napster is unlikely to respond to the most recent information, due to a quiet period ahead of an upcoming earnings call on February 8th.

Having built a digital music store from scratch I can tell you that it is a Herculean task. Mix that with the anachronistic business practices and models of the major labels and you get an extremely high barrier of entry into the digital music store business. If your goal is to get into the business quickly and with a minimum of fuss (read: dealing with the labels) the only path is to buy an established player.

This ‘news‘ (life-essence-sucking registration required), if true, would fast-track Google into the digital music space by granting them access to an established catalog with download and subscription rights from the labels. However, if they hope to leverage the dMarc acquisition they had better read those label deals carefully to ensure that streaming rights are included on the in-place agreements.

Update: Turns out, not so much.