"What it means for Napster users is, be ready to be more confused by a service that was very simple and easy for you to begin with," Webnoize digital entertainment researcher Gregor Rohda told NewsFactor Network.

"There's going to be the basic service, and then the premium service, which is essentially Napster branded MusicNet. The integration of those two experiences, from what we've heard, is going to involve two different audio players, two different search windows," and not take advantage of the groundbreaking Napster engineering, Rohda said.

Conditional Approval

EMI, BMG Entertainment and Warner Music Group will allow their copyright-protected music to be delivered to Napster users -- but only "at such time as Napster is operating in a legal, non-infringing manner, and has successfully deployed a technology that accurately tracks the identity of files on the service," the two sides said in a joint press release.

In a demonstration of MusicNet before Congress in May, RealNetworks CEO Rob Glaser said consumers would pay somewhere between US$10 and $15 per month to subscribe to the service, which he compared to a magazine or cable TV bill.

That would give consumers the ability to listen to streamed versions of songs and to download them as part of their subscription.

Three's Company

Napster became the third major Internet company to sign on to offer MusicNet content. America Online and RealNetworks will also be MusicNet distributors through their Web sites.

"MusicNet is focused on providing a platform that will help consumers who are used to the experience of Napster to find, acquire and enjoy music in a manner that's legal, reliable, secure and supportive of artists and rights holders," said Glaser, interim CEO of MusicNet, in a statement this week.

Napster's agreement to offer the paid MusicNet service doesn't end the lawsuit against the once-renegade Web site, which once allowed its millions of users to freely download just about any song ever recorded.

Napster and the record labels that are suing it for copyright infringement were scheduled to be back in court Wednesday, when a U.S. District Court judge was to hear a report on Napster's compliance with her order to prevent copyrighted content from being traded.

No Duet Here

Napster's agreement with MusicNet is an exclusive arrangement, which could prevent Napster from offering content from the other two major record labels, Sony Music and Vivendi Universal.

Those two will offer a competing subscription-based music service, known as Duet, which is calling its concept "tethered" downloads -- implying that users will not be able to freely trade downloaded songs.

"That exclusivity means a lot more to MusicNet than it does to Napster," Rohda said. "If the Napster service does do awfully well, Duet is going to be saying, 'We're missing out on this boat completely,' and will be forced to enter into a deal with MusicNet."

Observers say the deal seems to offer more to the record labels than it does to Napster. The arrangement puts the labels, and likely the MusicNet brand, in front of the largest Internet audience of music consumers. For Napster, it means the ability to stay in business, Rohda said.

Napster's filtering efforts have taken a toll on the site's user base, with the number of music downloads dropping 87 percent in May, compared with February, according to Webnoize. Napster claims it has maintained a base of 6 million daily users.