Napster Converts to Fee-Based Music Site.

Byline: Bob Keefe

Nov. 1--Napster Inc. is getting legal.

The online music-swapping service is teaming with German media giant Bertelsmann AG to become a secure fee-based membership site that will pay royalties to artists for copyrighted songs.

Napster Chief Executive Hank Barry said the site will soon start charging its 38 million users a monthly fee --- probably about $5 or so --- to swap music files and access BMG's catalog of songs.

Bertelsmann, one of the world's biggest media conglomerates, plans to eventually use Napster's revolutionary file-sharing software to distribute everything from books to films.

In the meantime, its BMG music subsidiary plans to drop its copyright infringement lawsuit against Napster --- although the fate of the suit, which involves 17 other record labels, remains in doubt.

BMG also will make its entire catalog of music available on the company's site. Bertelsmann has agreed to …