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To think Google would ignore the major opportunity that music streaming presents would be foolish. In fact, pre-I/O rumors pretty much nailed the fact that the company was striking deals and developing its own music streaming service. At this point, everyone — from Apple and Amazon to Spotify and Rdio — have been on alert that Mountain View was planning to dive into this area.

According to Juniper Research, streaming music revenues are on track to rise by more than 40 percent this year, increasing to $1.7 billion by the end of 2013, and that’s just for mobile. While that may not compare to, say, iTunes sales, it’s still a sign of high growth for this industry, which has leapt the tech geek niche and been adopted by everyday users. Sweden-based Spotify, which came to the U.S. nearly two years ago, now has more than 24 million regular users. Pandora serves more than 200 million users.

No wonder Google is interested. Word has it that its success with music in the download store has been rather limited, so it went to work negotiating agreements for streaming for months now. Wrangling those relationships was tricky business. Many music labels depend on YouTube to promote artists, songs and albums, but the Recording Industry Association of America also criticizes the tech giant for doing too little to fight online music piracy. That didn’t stop the company from striking deals with major music labels though — reportedly Universal Music Group, Sony Music Entertainment and Warner Music Group — and that meant it was ready to be announced at Google I/O today. 

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Now that it has debuted, will users embrace Google’s “radio without rules”? Well, there’s potential for some confusion, considering the company is said to be working on a YouTube music service to join its previously introduced paid video channels. But the bigger issue may be the subscription price.

Google music streaming isn’t free, unlike many of its other services. All Access subscriptions are $9.99 per month in the U.S. It’s a little surprising that the company didn’t offer a free tier, like Pandora and Spotify, and its subscription price is on the upper end of what some competitors are charging. About six million Spotify users pay $5 or $10, depending on service tier, and while the vast majority of Pandora’s listeners have free accounts, a segment of its user base pays $3.99 monthly for Pandora One.

At least there’s a 30-day free trial, and All Access users who sign up by June 30 can get $7.99 monthly pricing. After that, it presumably goes up to full price.

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So the million (billion?) dollar question is, how will users respond to the service? Chances are, huge throngs of people will be curious enough to give the free trial a whirl. But how many of these free users will convert to paid members? Much depends on how valuable they find the features:

  • Individual song selection that can also be used as a basis for a custom radio station, with music relating to that track.
  • A search field on top of All Access where users can search artists, select genres and add tracks to their library.
  • A Library that can contain personal songs plus anything added from All Access.
  • Listen Now: Automatically created and updated sets of favorite artists, radio stations and recently played songs that are playable across smartphones, tablets and Web browsers.
  • Reordering of queued-up tracks.
  • Ability to swipe to remove songs.

What do you think? Does Spotify, Pandora, Slacker, Rdio, or even Amazon or iTunes have anything to worry about? Let us know what you think of Google All Access so far.