Google Music - An Opportunity Missed

The following is pure speculation, with a touch of hopeful optimism, and not based on fact or any insider knowledge.

Google's plans to dominate your every online move is well documented, and considering their basic business model, it makes a lot of sense. Their main revenue stream is from advertising, and quite simply, the more people they can get online, the more their advertising will be seen. So how to get more people online? Simple; create a set of applications, add a 'cool' factor to lure people in, and then give them away for free. They started with Gmail, added calendar, docs, photo editing and management, earth, maps, and so the list keeps growing.
People's acceptance for working in the 'cloud' is growing, and their concerns over privacy are diminishing. Next year they'll launch Google OS on machines that are simply a vehicle for the Chrome browser, and I have no doubt people will buy them in their millions.
What are the 3 main uses for a computer?

1. Research - This is where Google started; their search engine dominates worldwide.
2. Work - Google already has this covered with Google docs, and several large corporations have already made the transfer to the 'cloud'.
3. Recreation - Google has a very popular photo application in Picasa, and has video wrapped up with YouTube. They have also been active in Social Networking, although Orkut wasn't as successful as they would have liked. However, Friend Connect continues to grow, and rumours about Google's interest in Twitter keep resurfacing.

Where it falls short is music. How Google OS will handle music has not been fully addressed, as the machines intended to run Google OS are not intended to have the huge memory required to store thousands of MP3's. Although their are plenty of options for streaming music on the web, these sites have been faltering under the burden of fees paid to the music labels, and are more and more turning to subscription based services.

Lala had a great model, and would have been a perfect fit for 'Google Music". On one's main PC, you access your Lala account and upload your entire music library to Lala, and then access it from any machine, via the web, for free. And legal. And the beauty of the system is that you don't have to physically upload your entire collection which would use many GB of bandwidth (and take days, if not weeks) - Lala scans your music library and registers each song in it's system. Then, if you want additional music, there is a nominal charge to allow streaming, or the option of downloading the song at a cost comparable to iTunes.
Lala sounded like they had the perfect model for Google, and they were for sale. But Apple beat them to it, and we will probably see these features being rolled out in iTunes at their next release.
The unfortunate problem with that is Apple's notorious 'walled garden'. You can only access iTunes with your iPod or iPhone, and although there are millions (and millions) of such users, supporters of Google's own Mobile OS, Android, will not be able to access Lala on iTunes. Google really slipped up on this one. Hopefully they have an even better solution!