Napster is back!

NEW YORK:A revamped version of Napster, an online service once synonymous with music swapping, is set to launch in time for the Christmas holidays -- in a vastly different market from its earlier incarnation.

Roxio Inc., which bought the assets of Napster at a bankruptcy auction last year, said on Monday the new service would let users access music through a subscription or on a fee-per-song basis. Shares of the maker of CD burning software surged to their highest level in more than a year.

Once a wildly-popular free file-swapping service with more than 60 million users at its peak, Napster was brought to its knees in 2001 after it lost a copyright infringement lawsuit with the world's largest record companies.

And in the last several months, several companies with marketing muscle have announced plans to start online services to convert the downloading craze into a profitable business.

Apple Computer Inc. launched its iTunes service to users of its Macintosh operating system in April. AOL Time Warner Inc.'s America Online is working on a service for introduction later this year. Amazon.com Inc. has also expressed interest in online music delivery.

Other smaller players are planning similar services. Musicmatch Inc., a popular music software company, said on Monday it reached nonexclusive agreements with nine labels, including EMI Group, BMG Music and Universal Music Group, to provide music for its download service to be launched broadly this fall.

And Scott Blum, founder of Internet retail site Buy.com, has said he plans to spend about $40 million to launch a service called BuyMusic.com.

RealNetworks Inc., which is set to buy Listen.com and its Rhapsody subscription service in the third quarter, is planning to start an online music store by the end of the year.

Users of the new Napster 2.0 service will be able to search for music, listen to pre-programmed radio customized to their tastes, burn CDs and download music to other devices, said Roxio Chief Executive Chris Gorog.

"It will be very reflective of the key characteristics of the original Napster, which is independence, innovation and freedom of choice and empowering consumers to do exactly what they want to do and navigate and search to their personal tastes," he told Reuters.

Gorog said the record labels have become much more liberal about the use of their music online.

"Certainly there are some artist holdouts," he said, "but we are finding the hold-out artists to be very receptive to the new Napster."

Roxio has not yet started testing the new service, Gorog said.

He declined to comment on when Roxio expects to make back its investment in Napster.

© Reuters