In exchange, Bertelsmann will drop its lawsuit against Napster, make its music catalog available, and gain the right to buy some of Napster’s stock. In the meantime, Bertelsmann will make Napster a loan to help develop the new subscription service.

Details of the agreement were not immediately available. The move marks a sharp break with other members of the music industry, which have been suing Napster for copyright infringement and trying to get it shut down.

It remained unclear whether any of the four major music companies would follow suit. The industry has been struggling to provide legal alternatives to free file-sharing services such as Napster. If Bertelsmann’s deal holds, it could jump-start the music industry’s move into digital distribution.

The companies said in a joint statement that they would “seek support from others in the music industry to establish Napster as a widely accepted membership based service and invite them to participate actively in this process.”

Bertelsmann owns BMG, one of the five major music companies along with Sony, Universal, Warner and EMI.

Company chairman Thomas Middelhoff said 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.”

Napster CEO Hank Barry called the deal with Bertelsmann the “right next step” for the company. Barry had said earlier this month that the company was thinking about charging monthly membership fees to users.

Napster has taken off since being founded a year ago by then-college freshman Shawn Fanning, and now claims 38 million members who can swap music files for free online. It is awaiting a federal appeals court ruling on whether it can continue operating pending trial in a suit filed by the recording industry.

Several other online music sites, led by MP3.com, have embraced such subscription models, which are as yet unproven.

But none of them use the wildly popular peer-to-peer file-swapping method employed by Napster in which users share their music over the Internet and Napster is the clearinghouse. MP3.com was also sued by recording companies for copyright infringement, but has settled with all but Universal.

Whether fee-based Internet music delivery services will be viable remains to be seen. A number of software programs freely distributed on the Internet allow users to swap bootleg music without the need for a central server clearinghouse of the type Napster provides.

Without such a clearinghouse to target, the recording industry and law enforcement would have to go after each individual user to stop Internet file-sharing.

Bertelsmann, which also owns book and magazine publishers as well as a major broadcasting network in Europe, has been ramping up its push into the online world.

It owns a major stake in barnesandnoble.com, all of CDNow and numerous other Web sites. Middelhoff said the deal with Napster could provide a model for distributing other forms of media online. “Our goal is to deliver content and entertainment to our customers, regardless of which channels are used,” he said.