In a press conference held on Tuesday, the popular music-sharing internet site Napster announced that it will stop offering free service by the summer, moving instead to a fee-based pricing plan.

Napster also offered to pay $1 billion over the next five years to major record labels, songwriters, and independent artists to settle claims of copyright infringement.

Napster's proposal for a new business model involves a two-tiered pricing plan. Users would choose between a premium membership plan, which would cost $5.95 to $9.95 per month and offer unlimited file transfers, and a basic plan, which would place a cap on file transfers and would cost an estimated $2.95 to $4.95 per month.

The announcement comes on the heels of the blow Napster suffered last week in the Ninth Circuit Court of Appeals. The Court's opinion stated that Napster aids its users in infringing upon the rights of artists and producers.

A statement released yesterday on the Napster website explained the shift in policy.

"Now that the [recording] industry has the legal precedent they were seeking, it is time to reach an agreement. If the industry has the consumer and their own bottom line in mind, there is an agreement to be had here."

However, Hillary Rosen, CEO of the Recording Industry Association of America (RIAA), has yet to respond to Napster's latest move.

Before the press conference, Rosen called on the management of Napster to "stop the infringements, stop the delay tactics in court, and redouble your efforts to build a legitimate system."