The news was reported by Bloomberg, citing an unnamed source. The development comes at the same time that Google is preparing to hold a music event tomorrow in Los Angeles, which we will be covering. It’s thought that Google will be revealing more about its music download store then.

A deal with Universal would be a huge boost for Google’s music effort, which has reportedly only signed up EMI so far. Sony (NYSE: SNE) Music and Warner Music have stayed away because of pricing and privacy concerns, according to the report.

Google may be revealing more of its music offerings tomorrow, but it won’t be its first moves into the space:

In May, the company launched a beta of what we currently know as Google Music, which is essentially a digital locker that lets users upload some 20,000 songs to listen to via a browser or Android device. In April, Google bought the Canadian startup PushLife for $25 million. PushLife has developed its own technology for mobile music purchasing, streaming and sharing services.

Tomorrow could see another advance in Google’s services combining these — and, with Universal’s blessing, hopefully with some content behind it to boot.

Universal is owned by the media conglomerate Vivendi (EPA: VIV) and is currently the world’s largest music company, accounting for 26 percent of all music sold. It represents artists that include Lady Gaga, pictured, and teenybopper heart throb Justin Bieber.

The reports of Universal’s purchase of EMI’s recording division have yet to be confirmed, but if it is true, that, when completed, will add another 9 percent of music sold worldwide to Universal’s control, according to Reuters.

Sony is reportedly buying the other half of EMI, its publishing division, for $2.2 billion. That means that EMI broken up is getting sold for about half of what Terra Firma paid when it bought EMI in 2007: £4.2 billion ($6.7 billion).

It’s not clear whether or not Google is actually trying to get a native Music Beta app approved by Apple (NSDQ: AAPL) (a company representative told Techcrunch that it was “considering all options” but wouldn’t comment further). But given that Google has been an outspoken advocate of mobile Web technologies, it’s not that surprising that it would choose such a route even though it has launched an Android app for the Google Music Beta.

Google’s music service hasn’t exactly set the world on fire since it was unveiled at Google I/O in May, but it’s still in a beta format and not open to everyone, so it can’t really be judged quite yet. There’s little doubt that it wouldn’t really work without bringing the iOS user base over to the service in some fashion, but given what Apple has planned for the iOS 5 and iCloud launches, it’s hard to believe that too many iOS users are dying to get into Google Music Beta.

Executives unveiled the service Tuesday morning at Google I/O amid a host of other Android-related announcements. The 5,500 or so attendees at the conference in San Francisco will be the first to test out the service, which will let users upload 20,000 songs to the service and access them through a browser or Android device: iPhones need not apply. There’s no way at the moment to download those songs to reside permanently on devices, but there will be some limited amount of caching on the device so recently played songs will stick around when offline.

Google had hoped to launch a broader service, perhaps allowing users to purchase songs through Google, but couldn’t get enough major carriers on the same page as the search giant to go forward with anything beyond Music Beta, executives said in a press conference after the keynote address. Google said that smaller labels and independent labels were potentially interested, perhaps setting up a future release that allows music purchases from only certain companies.

“We felt that both from a product and business standpoint, we were not on a path to launch something that we thought would appeal to consumers,” said Jamie Rosenberg, director of digital content at Google.

So what has arrived is essentially the same service that Amazon (NSDQ: AMZN) is providing, rather than some sort of iTunes-competitor that many music fans and businesses had hoped for. Google emphasized several times that it believes Music Beta is legal (it’s U.S. only for now), but with Apple (NSDQ: AAPL) expected to finally launch a cloud version of iTunes sometime later this year with support from carriers, it’s hard to see exactly how a limited service could compete with an Apple service that would allow both storage and new purchases.

Often derided for keeping products in beta long past their maturity, Google is taking very cautious steps with this service. Some choice disclaimer language–that the service is available for free “for now”–indicates that Google likely still wants to incorporate some sort of purchase model down the road.

A live stream is available here. Updates:

Honeycomb 3.1: Google is planning to release an updated version of Honeycomb, it’s tablet-optimized Android version, starting today for owners of the Motorola (NYSE: MMI) Xoom tablet running on Verizon’s network. The new Honeycomb allows developers to take advantage of more options with Android widgets, such as stretching them both horizontally and vertically. Andritoid tablets will now also be able to work with many more USB input devices, including even game controllers. Android 3.1 will be coming to Google TV as well with access to the Android Market, giving developers another outlet for TV-optimized apps.

Ice Cream Sandwich: Later this year Google will release the next full version of Android with hopes of unifying smartphone and tablet versions.

Android Market Movies: Google will stream movies through the Android Market starting today for users, demonstrating the process at the show. Xoom tablets also have access to a new movies application that takes advantage of the larger screen, and movies can also be saved to devices through a process called “pinning.”

Music Beta By Google: As expected, Google showed off its music locker service, which for now is being called Music Beta. It’s actually a desktop application for both Windows and Mac that allows you to take music and playlists stored on your computer and move them to the Web, where they can be accessed through a browser. The service also has something called “instant mix,” which seems an awful lot like Apple’s Genius service inside iTunes. In fact, Paul Joyce of Google noted the Google service produces “a very ingenious playlist” with a wry smile. Google made sure to emphasize several times that the service doesn’t require cords to sync music, which of course Apple’s iTunes Store requires.

It launches in beta today, and will be opened up gradually to U.S. users but by invitation only. Users can upload 20,000 songs to the service, and it’s free “while it’s in beta,” Joyce said, which is interesting. Google I/O attendees will get invites.

Anti-Fragmentation: Barra annouced that Google is gathering key Android partners into a consortium that will do a better job of letting Android users know how long they can get Android updates, and when they’ll receive new updates. Verizon, HTC, Samsung, Sprint (NYSE: S), Sony-Ericcson, LG (SEO: 066570), Motorola, T-Mobile, Vodafone (NYSE: VOD), and AT&T (NYSE: T) are among early partners, and devices launched now will receive updates for 18 months if the hardware allows, Barra said. More to come on that later.

Open Accessory Project: Google plans to release an accessory development kit for hardware developers to create accessories that work with Android phones and tablets. They demonstrated how an exercise bike at the gym could allow you to use the bike to control a game, as well as a version of the Labyrinth game that was controlled by an Android tablet.

Android At Home: Google is working on ways to bring Android into home accessories, with plans to release a framework for developers working with things other than phones and tablets to use some of Android’s intelligence. It would also allow makers of those devices to send better notifications to Android devices: think the classic home automation applications such as turning on the lights from the phone, warning notifications if the furnace fails, and the like. It can work with the new music service to allow an Android phone or tablet to act as a remote control.

Oprah Moment: The new Samsung Galaxy Tab 10.1 announced at CTIA is the door prize at Google I/O 2011, which got more of a cheer from the crowd than anything else Google announced this morning combined.