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Napster signs Euro indie labels

Controversial song-swapping company will be able to include songs by stars such as Paul Oakenfold and Badly Drawn Boy on its forthcoming pay-to-listen MusicNet service

Napster today signalled the end of free music swapping on its service, with the announcement that it has signed up the European independent music industry.

At a press conference in London attended by Napster's creator Shawn Fanning, Napster executives announced that music from independent labels would be included on its forthcoming subscription-based service, which is due to go live later this summer. The deal, which took four months to agree, gives the song-swapping site the rights to offer music from 150 independent labels, and artists such as Moby, Belle and Sebastian and Ash.

"This deal moves Shawn's vision into a new phase, beyond the controversy of file-sharing and into a new popularity," claimed Hank Barry, Napster's chief executive. Barry also denied claims that Napster would not manage to launch the service in time to hit the 1 July deadline.

The Association of Independent Musicians, which had a key role in negotiating the deal, said that it would help independent musicians get access to a wider community. "Under this deal, Napster will become a new way for artists to reach their fans, especially those musicians who don't get played on radio or MTV," said Alison Wenham, chief executive of AIM.

Neither AIM nor Napster would disclose the financial details of the deal, which follows a similar deal earlier this month with MusicNet.

MusicNet, which was first announced earlier this month, was formed by RealNetworks with Warner Music Group, Bertelsmann and EMI Recorded Music. It is expected eventually to give Napster access to more than half of the mainstream music most often sought by consumers. The service is expected to be much like the original Napster, with members able to swap music at will. But under the plan, record labels will license the songs to eliminate the copyright problems that have dogged Napster in the last year and a half.

Napster has been beta testing the service since mid-May, when it launched an appeal for testers. The service was originally met with scepticism from the industry, initially only attracting Bertelsmann, which owns BMG Entertainment. On Tuesday, Barry said that more than a million people had signed up for the beta testing.

Napster executives have previously said the new service is likely to cost between £5 and £10 a month depending on how much music consumers want to download. Songs downloaded would be limited in audio quality and unable to be burned to CD.

The free service will disappear shortly after the subscription service begins, executives have said.

The announcement follows Napster's defeat at the hands of a federal appeals court in the US which on Friday determined that the service must continue to block the swapping of copyrighted music.

In a terse, two-page order, the 9th US Circuit Court of Appeals denied two separate requests from Napster, saying it would not rehear issues it ruled on last February after record companies sued the service. At that time, Napster was ordered to install filters that slashed the number of songs available through the service, reducing traffic on the site precipitously and steadily.

According to industry consulting firm Webnoize, the average number of files shared by a person on the Napster network fell from 220 in February to just 21 by the end of May. Webnoize also estimated that just 360 million files were traded through the service in May, compared with 2.79 billion in February.

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