Napster to join forces with AOL

Napster Inc. will become the exclusive music subscription provider for AOL, replacing AOL’s Music Now service and bringing Napster closer to 1 million customers.

AOL’s 350,000 paying music subscribers will be switched to Napster accounts over the next 60 days unless they opt out, the companies said Friday. Los Angeles-based Napster had a total of 566,000 customers as of Dec. 31.

Chief Executive Christopher Gorog took another step toward expanding Napster with the agreement, which may increase his subscriber base by as much as 62%. This month, Napster said Virgin Group Ltd. would market the download service to its digital music customers, helping Napster expand to compete with rivals such as Apple Inc.’s iTunes.

“For Napster, it’s a cheap way to dramatically increase their subscribers,” said Frederick Moran, an analyst at Stanford Group.

AOL, a Dulles, Va.-based unit of Time Warner Inc., switched to Napster less than six months after reworking Music Now to integrate assets acquired in 2005 from Circuit City Stores Inc.

“This is an acknowledgment by AOL that they were frustrated with their digital music service,” Moran said.

Shares of Napster rose 30 cents to $4.12.