ONLINE music site close to deal with three major record labels

<br>SAN FRANCISCO (AP) _ In a deal that could legitimize Napster, the outlaw song-sharing service is close to signing a deal with three major record labels to participate in a new music subscription service

Tuesday, June 5th 2001, 12:00 am

By: News On 6

SAN FRANCISCO (AP) _ In a deal that could legitimize Napster, the outlaw song-sharing service is close to signing a deal with three major record labels to participate in a new music subscription service this summer, industry sources said Tuesday.

The agreement between Napster and the members of MusicNet could be announced as soon as Wednesday, according to the sources, who spoke on condition of anonymity.

MusicNet is a venture between record label owners AOL Time Warner Inc., Bertelsmann and EMI Group, as well as Seattle-based RealNetworks, whose software allows users to listen to music and video via the Internet.

Details have yet to be worked out, and it remained unclear how the companies would distribute music.

If a deal is worked out, it could provide MusicNet access to loyal users of Napster _ and allow Napster access to a large bank of legal music files.

MusicNet has not determined what it will charge for access to songs. Napster has also said it hopes to roll out a new version of its service this summer that would ensure royalty payments to artists and labels.

Napster is being sued by the music industry for copyright infringement and has been trying to purge copyright-protected music files from its system under court order. Napster has yet to satisfy industry concerns.

Warner Music Group said Tuesday that there could still be serious hitches in the deal.

``As previously announced, our content will not be available to Napster as part of the MusicNet service until we are reasonably satisfied that Napster is operating in a legal, non-infringing manner,'' Warner said in a statement.