AOL Music Now will roll its 350,000 paying subscribers into the Napster service unless they opt out within the next 60 days.
AOL set up Music Now after buying Circuit City Stores' online music business in 2005. As part of the deal, AOL will advertise Napster on its free AOL Music site.
Napster is also considering a buyout offer after a third-party expressed interest in the music provider.
Napster chief executive Chris Gorog confirmed that the company is involved in "multiple conversations".
Napster was originally a pirate peer-to-peer service offering copyrighted material for free download before being shut down in July 2001.
The company was bought by Roxio in 2002 and reopened as a legitimate music retailer in 2003.
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