Napster will launch a subscription-based file-sharing system offering "high-quality music downloads", according to Bertelsmann Music Group (BMG).

Thomas Middelhoff, Bertelsmann's CEO, announced there would be a second Napster service. He expects the new service to go live in June or July.

Frank Sarfeld, senior vice president of the Bertelsmann eCommerce Group, said: "The new service will co-exist with the existing Napster service. Internet users will still be able to use the current Napster service."

Priceless
Sarfeld said a survey of 20,000 Napster users conducted in December by Webnoize showed that many would pay up to $15 a month for the music-download service. However, Sarfeld cautioned, this is no indication for what the fee will be. He added: "We are not talking figures yet."

In August, Napster CEO Hank Barry, suggested a monthly charge of around $5, but said that figure shouldn't be taken too seriously.

The second Napster model will pay artists and copyrights holders, Sarfeld said. Payment is needed, he said, "to ensure new music will be out there".

Two-tier service Sarfeld wouldn't go into detail, but he said the second Napster would offer better service than the existing one. He claimed: "It will offer reliable downloads, files will be scanned for viruses, and all songs will be available all the time."

Bertelsmann formed an alliance with Napster last October. The German giant provided Napster with a loan when the company was facing legal challenges from the record industry. It has been rumoured that Bertelsmann currently holds a majority stake in Napster. Sarfeld strongly denies this.

Napster has approximately 57 million users worldwide. The company has been in legal battles with all the large record labels, which once compared downloading via Napster to stealing compact discs from a record store.

Established music-business companies are increasingly trying to develop an online presence, inspired partially by the success of services like Napster and MP3.com. Music industry insiders are experimenting with business models, with a view to establishing subscription-based music download services.

They are faced with a large number of long-time users who believe "music should be free". The music business argues that artists deserve to be paid, and hopes to use online downloads as a valuable promotional tool. It is probable, insiders claim, that free as well as subscription-based download services will exist side by side for an interim period.