AOL Says Napster Will Be Its Exclusive Provider Of Music Downloads

AOL and Napster announced Friday that Napster will become AOL's exclusive provider of online music subscriptions. The decision moves AOL's Music Now service off the AOL network.

The firms said that Music Now customers can use the new service for the same $9.95-a-month price they have been paying. Music Now subscribers will be automatically migrated to Napster, unless they opt out of the new music delivery service.

Both Napater and Music Now use Microsoft's Media digital rights management service, so the companies don't anticipate major problems moving subscribers to the new service.

"Napster's new relationship with AOL provides us with an excellent opportunity to aggressively grow subscribers through deep integration with one of the most visited music destinations on the Web," said Chris Gorog, Napster's chairman and CEO.

The new arrangement is dwarfed by Apple Inc.'s iTunes music service, which dominates the market with more than 80% of downloaded music sales in the U.S. The AOL-Napster announcement comes in the same week that Apple unveiled its music-playing iPhone to generally ecstatic reviews.The new AOL-Napster deal has a complicated history: AOL acquired Circuit City Stores' downloadable music store in 2005. Now customers will be switched over to the new Napster service. Napster's technology reached near-generic status as the first large successful music downloading service. However, the firm was attacked by recording industry interests, which forced Napster to shut down. The firm was then acquired by Roxio, which renamed itself "Napster."