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Napster set to return

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NEW YORK (Reuters) -- Like the phoenix from the ashes, the once-wildly popular Napster song-swapping service is slated to be relaunched before the end of the year, its new corporate parent Roxio Inc. said.

Once the scourge of the music industry, Napster had at its peak in 2000 more than 60 million people using its software that allowed Internet users to copy and share music for free, until the five largest record companies successfully sued the company for copyright infringement.

The record industry has long blamed such services for the decline in record sales. After declaring bankruptcy last year, many of Napster's assets were bought by Roxio, which makes CD-burning software and plans to restart Napster as a legitimate pay service.

"We're expecting to launch the service before the end of the year," spokeswoman Kathryn Kelly said. "But we're not relaunching until we can establish it as a legal service."

Discussions with record labels

She added that the company was in discussions with the five largest record labels -- Vivendi Universal's Universal Music Group; Sony Music; AOL Time Warner Inc.'s Warner Music Group; Bertelsmann AG; and EMI Group Plc -- to license their music. (AOL Time Warner is CNN's parent company.)

Santa Clara, California-based Roxio has also hired Napster's founder Shawn Fanning as a consultant.

Roxio plans to offer services that charge a fee for each individual song as well as subscription services that allow users to download songs for a monthly fee.

Roxio is not the first company to try to make a legitimate business out of Napster. Bertelsmann shocked the industry in October 2000 when it said it would invest in Napster, aiming to launch a legitimate subscription version of the service. At the time, its BMG music arm was suing Napster.

But Napster ran out of money before it could figure out a way to charge customers for downloads. In September, the bankruptcy court blocked Bertelsmann's bid to buy the Napster assets. Roxio managed to buy most of Roxio's assets, but it did not assume any of the company's pending liabilities.

Suit filed

That did not stop music publishers from suing Bertelsmann for $17 billion last week, arguing that by throwing Napster a lifeline in 2002 it was responsible for the service continuing its illegal infringement.

In the void left by Napster, several other free song-swapping services have emerged such as Kazaa, which is battling the record labels in court.

Meanwhile, commercial online music ventures like Pressplay and MusicNet, both of which are backed by the major labels, have had a difficult time finding their footing.

Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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