Napster Finds Duet Partner in … BMG?

Score one for the mp3. BMG parent Bertelsmann AG, one of the biggest record companies embroiled in the copyright-infringement lawsuit against Napster, has switched sides and formed an alliance with the song-swapping service.

The label is dropping its suit and plans to become part owner of Napster, creating a copyright-friendly version that will reportedly charge a monthly membership fee of around $4.95 to pay royalties. The Internet service is currently free and attracts some 38 million users.

“Napster has pointed the way for a new direction for music distribution, and we believe it will form the basis of important and exciting new business models for the future of the music industry,” said Bertelsmann Chairman and Chief Executive Officer Thomas Middelhoff in a statement.

Middelhoff says he has urged other labels to join the service. The BMG company’s many labels feature artists such as Christina Aguilera, TLC, Pink, Dave Matthews Band, Santana and Puff Daddy.

Company officials at a press conference say BMG will not drop its lawsuit against Napster until the new version of the service is implemented. Napster will put the new system in place as soon as possible, according to Napster CEO Hank Barry.

Barry also emphasized that Napster will continue to allow users to trade music files that they created on their own from CDs.

Meanwhile, Napster enemies Metallica and Dr. Dre plan to continue pursuing their own lawsuits, according to the artists’ lawyer Howard King.

“[A new subscription service] doesn’t mean we forgive and forget the past infringements,” King said. According to MTV News, King and other labels said they were cautiously optimistic about plans by Napster and Bertelsmann, while others questioned whether the plan will properly compensate musicians.