Stephen Foley: Google has its head in the clouds

US Outlook: Slowly but surely music is moving to the cloud. Following Amazon in March, Google this week started giving users access to a personal "digital locker" on its servers, for storing all your music files so that you can listen to them over the internet on any device.

But Google's talks with the major record labels broke down in rather acrimonious fashion, so Google Music Beta has none of the extra services, such as a music store or file-sharing options, that it hoped to launch.

The prevailing view is that the labels are being greedy, stubborn and stupid by not quickly agreeing licensing deals. Google and Amazon are offering new sources of revenue and, better still, the chance to entrench a new kind of paid-for music service that might wean listeners off pirate downloads. One Google executive snipped that the music firms were "less focused on the innovative vision we put forward, and more interested in an unreasonable set of business terms".

Google needs to get over itself and its arrogant view that it is doing the labels a favour. For the first time, digital music sales growth this year is more than offsetting declines in CD sales, according to Nielsen, so matters are not desperate. The labels – and their artists – deserve good terms, and Google must expect to pay up if it wants to offer a premium service to its users.