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Napster Puts Up Two Million Free Songs for Streaming

Napster Inc. (NAPS), the one-time renegade music download service, has returned to its roots with a new Web service which offers fans the chance to listen to over 2 million tracks for free.

The new service launched on Monday at Napster.com is supported by advertising and follows months of negotiations with record companies.

Napster will split advertising revenue with the record companies based on the number of times one of their artists' songs is played.

The new service, which comes in addition to Napster's existing subscription service, also allows users to send direct links of chosen tracks to friends. Users can listen to songs up to five times on the free site before having to pay.

"We have built this new Napster.com as an open platform," said Chief Executive Chris Gorog in an interview.

Gorog told Reuters that he expects the free service will increase visits to the site, which had been selling music downloads and has seen about 2 million visitors a month. A higher traffic rate would also generate more in advertising dollars for the company.

Napster hopes the free service will also serve as a word-of-mouth marketing tool to hook new listeners onto its paid subscription service.

"I don't think free music is a hard sell," Gorog said.

The new Napster service has a Web-based music player, is compatible with Internet browsers on most computers and does not require a user to download any software.

Napster ranks second among U.S. music download services in the United States but is far behind Apple Computer Inc.'s (AAPL) iTunes, which dominates 70 percent of the market, according to research firm NPD Group.

Napster has around 600,000 subscribers and offers unlimited online listening to tracks at $9.95 a month, or $14.95 for tracks to be transferred onto a separate device such as an MP3 player. But it is not compatible with Apple's iPod, the leading portable music player on the market.

The original Napster, founded by Shawn Fanning in 1999, provoked the ire, and legal challenge, of major record companies as the first online music-sharing service did not charge for the downloads or compensate labels and artists.

A U.S. court shuttered the service in July 2001. Its assets were bought by Roxio Inc. in November 2002, which relaunched a legal version of Napster some months later.

Napster shares were up 1 cent to $4.64 in afternoon trading on Nasdaq after hitting an earlier high of $5.10.