Google Internally Testing Music Service (Report)

While there's still no indication that Google has secured any music licenses, employees are said to be testing the product to identify any problems or glitches.

The Google Music service still isn't live, but there are reports that employees at the company have begun using it already.

According to CNET, Google employees are testing the product internally, which is a common practice for companies developing new services. It's designed to identify any problems or quirks before making it available to the public.
However there's still no indication that Google has finalized any music licenses yet needed to offer the same service to the public. Google would probably like to launch the service officially at its upcoming I/O developer conference this May, but it also originally hoped to go live with the service last fall as well. Label negotiations are funny that way.
The features of the service remain much the same as has been reported for several months now. It's a music locker system that would allow users to store music files on Google services and then stream them to any Internet-connected device running the appropriate software. That includes not only Android-powered mobile phones, but also tablets running the "Honeycomb" version of Android.
In February, Billboard published a list of key executives involved in the Google Music roll-out.