Once available free of charge, the MyMP3.com service, now has two levels of service. For no charge, members can store up to 25 CDs on the Net. That service will be advertising-supported.

Members willing to plunk down $49.95 will be able to store up to 500 CDs, and have access to more features and less advertising.

MyMP3.com allows consumers to store songs on the Internet and listen to them over any Web-enabled device. The service triggered a copyright infringement lawsuit in January by the five major record labels, music publishers and several independent labels.

The plaintiffs argued that by allowing people to instantly listen to music stored in the MP3 format on MP3.com’s servers – even if users had bought the CD from MP3.com or proved ownership by through online verification – the company illegally distributed music and breached copyrights

San Diego-based MP3.com disabled the service in May to prevent anyone from storing music produced or distributed by the recording companies that filed the copyright lawsuit.

Over the course of the summer, the Internet company reached settlements with most of the labels, agreeing to pay a lump sum for past violations and a licensing fee for future use. Every major label settled, except for Universal Music Group, which forced the case to trial.

In September, U.S. District Judge Jed S. Rakoff ruled that MP3.com willfully violated record company copyrights and ordered the company to pay damages.

Last month, MP3.com ended the lawsuit by agreeing to pay UMG $53.4 million but still faces lawsuits from several independent labels. The remaining disputes over licensing and copyrights may explain why certain songs on any given CD are not available for listening through the service.

Several critical issues still remain for the company, including its efforts to negotiate licenses with independent labels that represent major artists such as The Backstreet Boys and ‘N Sync. It also remains to be seen if consumers will pay a subscription fee to listen to music they already own.

“Nobody yet knows how popular the premium service may prove to be,” Phil Leigh, an analyst at Raymond James & Associates wrote in a report Tuesday. “To date, there has been little evidence that consumers are willing to pay for content on the Web, as evidenced by the experiences of organizations like Slate and TheStreet.Com.”

MyMP3.com will likely face competition from companies that entered the game later, avoiding incurring the wrath of the recording industry and subsequent costly lawsuits.

Musicbank – a company that has yet to make its Net debut – is one service that will go head-to-head with MyMP3.com. It provides storage and song streaming like its predecessor, but it made deals with the music copyright holders before it went live. The tunes on Musicbank will be fully licensed from the get-go, and the service will be free to users thanks to advertising.