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By Andrew Craig, VNU Net

Napster is under fire from all corners of the music industry, but Alan McGee, the man who discovered Oasis, said that overall the music sharing system is actually helping the industry.

The Creation Records founder said in an interview with vnunet.com that while Napster should not provide free access to copyrighted music, it is helping the music industry by offering easier access to bands' material.

"I don't think people should be getting music for free," said McGee. "But Napster overall is very good for the music industry. It makes people interested in bands' back catalogues."

McGee's comments came as he announced plans today to float his new record label, Poptones, next month. Poptones plans to raise £2.05m through a placing on London's Alternative Investment Market, which would value the company at £11.44m.

The label is gaining notoriety by promising to outsmart the major labels by moving fast to embrace new technologies such as digital music downloads and to undercut high street shops by selling direct online at a fixed price of £9.99 per CD.

Poptones will begin selling its first releases online in September, accompanied by downloadable audio clips. Digital downloads of whole songs and albums will follow, but no date has been set for this service.

Poptones will also distribute physical CDs through high street retailers, and McGee was keen to stress that it is "not a dotcom record company". He has some 15 new bands in the pipeline, but insisted that he is not looking for the new Oasis. "The point is not to have a new Oasis or whatever, but to have culturally important and good music."

McGee said downloadable music purchases combined with the Napster-type distribution system would lead to a shift in the way music is sold, from physical CDs and records to subscription-based access and downloadable music.

"We're heading towards a subscription model where people will say 'let's have a couple of Clash songs and a couple of Elvis Costello songs'," rather than entire CDs, said McGee. Poptones is considering a move to this model of distribution, he added.

"This means more music for more people at a cheaper price. If anything, music is going to become more popular."

In a separate announcement, US company EMusic.com said today that it has launched a subscription service allowing unlimited MP3 downloads. Users will pay according to how many MP3s they download.

The company, which describes itself as a "legitimate alternative to tools like Napster" said it has a digital music library with in excess of 125,000 MP3 files. It said it would use subscription fees to pay artists and record labels.

Controversy surrounding Napster has been linked with a boom in interest in online music. The number of adults accessing online music sites has increased by almost half since the start of the year, according to New York-based Cyber Dialogue. Meanwhile, Napster is now the UK's forty-second most visited site among home users, according to Net Value.

However, the music sharing system remains embroiled in a number of legal spats with recording artists such as Dr Dre and Metallica, and is fighting a lawsuit by the Recording Industry Association of America, which calls for much of the company to be shut down.

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