Napster CEO Hank Barry said he's open to discussing royalty payments to record companies to resolve their lawsuit charging Napster with copyright infringement

"It's hard to put together a business model when you're fighting litigation 24 hours a day," said Barry. "We stand ready to have more talks."

Any settlement negotiations would involve "finding a way to compensate artists and meet the needs of the users in the community," Barry said. "A royalty agreement would work [or] some kind of fee payment."

A federal judge is scheduled Wednesday to hear the music industry's request for a preliminary injunction against Napster.

In related news, users of networked music-sharing technologies, such as Napster, are 45% more likely to have increased their overall music purchasing than nonusers are, according to a new study by Jupiter Communications.

Record companies must refocus their strategy from litigation to adoption, and incorporate networked music sharing into their distribution channels.

"Because Napster users are music enthusiasts, it's logical to believe that they are more likely to purchase now, and increase their music spending in the future," explained Aram Sinnreich, an analyst with Jupiter. "But when we conducted our consumer survey, controlled for key music purchasing factors—such as existing spending level, age, income, gender, and online tenure—we still found that Napster usage is one of the strongest determinants of increased music buying."