The service was to launch Thursday with more than a half-million songs from all the major music labels and offer both individual song and album downloads as well as a subscription service.
"This new service is not like the old Napster," said CBS News technical analyst Larry Magid. "The old Napster was a free-for-all, where people downloaded music without having to pay for it. The new Napster will charge people and pay fees to the music industry, but at least nobody will get into trouble for using it."
Software maker Roxio Inc. shelved its former online music service, pressplay, and was beginning to move subscribers to a beta, or working version, of Napster 2.0.
Pressplay, which went off-line Tuesday, only offered access to songs for a monthly fee.
Napster 2.0 users can expect prices to be in line with what other services charge, which is about $1 per song and about $10 for full albums or monthly subscription.
"The legal music downloading industry has actually become a crowded field, with a number of players," said Magid. "Napster is a recognized name, and it could help bring market-share to this new venture."
Like other music download retail sites, Napster 2.0 will incorporate some usage restrictions, but officials at Santa Clara, Calif.-based Roxio downplayed their effect.
"Ninety-nine percent or more of our Napster users will never bump their heads against any usage rules," Chris Gorog, Roxio's chairman and chief executive, told The Associated Press Wednesday.
"They're going to be in an environment where everything costs the same, where every song that they select they can burn to a CD or offload to their device, they can do it multiple times and they won't even know what the usage rules are because they are so flexible."
The company planned to disclose further details Thursday during an official launch.
The service will be available to the general public within a month, according to sources familiar with the plans.
Roxio is betting the Napster brand will help set its service apart from a bevy of other digital music retailers that have launched since Apple Computer Inc. introduced its iTunes Music Store in April.
The music industry has seen CD sales plummet over the last three years as illegal music file-sharing exploded, beginning with the original Napster, which was forced to shut down in 2001 after a protracted legal battle with recording companies.
Meanwhile, file-sharing over the most popular peer-to-peer networks has declined in recent weeks, coinciding with a lawsuit campaign against downloaders by the recording industry.
Traffic on Kazaa's network, the most popular, dropped 41 percent between the last week of June and mid-September, according to Nielsen NetRatings, which monitors Internet usage.
At the same time, online music sales are expected to grow from 1 percent of the total music market to 12 percent in 2008, generating about $1.5 billion in sales, according to Jupiter Research.