Preview at WWDC likely in June, followed by September launch.
Google Music and Apple iTunes
Apple's iTunes is amongst the initial merchant partners along with RealNetworks, eMusic and Amazon.com
This confirms a Google and Apple rumor from August 2005 that claimed that "Google is going to offer iTunes somehow on their platform".
The new system appears to be in place (samples: Tanya Donelly, Crash Test Dummies)