You actually think Google with all of its resources and money is actually beholden to some always there and invisible bad group representing the music industry set to the destroy the world? I think you are probably mistaken, they are actually doing it to improve legal search results more prominently being displayed. Also there isn't any change to embrace, copyright infringement is still illegal, even if it is easy to get away with.
There is an alternative theory. Google isn't being strongarmed but they also aren't trying to improve search results. Instead they're trying to build moats around products like Youtube. By appeasing the content owners, the favor might be returned with, for example, exclusive content just for Youtube.
