By Merissa Marr, European media correspondent

LONDON (Reuters) - Napster may not be dead yet, but fans were looking to life in the after-world on Tuesday, as chat rooms filled with users discussing the prospect of paying up for their beloved free song-swap service.

But the outlook appeared dim, with users exchanging tips on fleeing to alternative free sites and lambasting music giants for sucking too much money from fans, following a court ruling which threatens to shut down Napster's wildly popular site.

"It does not seem fair that we should be charged to share our own files. It is what Napster was originally fighting for, free file swapping," wrote 'anonymous coward', a participant in a Napster chat room.

German media group Bertelsmann, which owns music major BMG, shocked the music industry last year by agreeing to develop a fee-based version of Napster, as music giants fought a court battle with the free site over copyright infringement.

Napster has pulled in close to 57 million users with its software which enables people to send copies of their music files to each other free over the Internet. But a lot of the attraction lies in the "cool" factor of the U.S.-based service which would be hard to replicate in a legitimate version.

"Bertelsmann saw the opportunity of gaining a huge mailing list and stifling the development of a huge threat to the traditional industry. But as a business model going forward, I think it has little scope," said one sceptical analyst.

Pay Up From July

Whatever its motives, Bertelsmann said on Tuesday it was still committed to launching a subscription service in the middle of this year and sees the lawsuit having little impact on its plans. But it has so far offered few details on what the new service will actually look like or cost.

The German media giant has said that internal surveys show 70 percent of users would be willing to pay for a subscription service. And as pirate radio stations have proved, going "legit" doesn't necessarily mean losing your "street cred."

But key to its success will be price.

"What is the latest word of the size of the flat fee that will be imposed on the Napster service. Ball park figure?" wrote 'damaninmilan', in a chat room.

Some rumours have suggested Bertelsmann and Napster may charge a monthly fee of $5-10. If just 20 percent of current users could be persuaded to pay $5 a month, that would equate to $700 million of annual revenues, but even diehard fans are showing signs that they will not dig into their pockets too far.

"Over-priced CD albums and CD singles is what has driven the popularity of shared music and Napster is a cyber-success that the music industry should be utilising rather than trying to destroy," wrote 'slamtilt'.

Many users will no doubt defect to rival sites such as Splooge, Toadnode and Swapoo, but Napster may be able to differentiate itself by offering an easier-to-use service which shakes off some of the crudeness of the current free services.

Analysts said universal broadband access would also be a factor in the success of a fee service. Fans may be willing to put up with slow access for a free service but not if they're paying.

But above all, Bertelsmann must draw in the other record labels -- a hazy prospect after Monday's ruling which held Napster must stop its users from trading copyrighted material.

The five majors, which also include Universal Music, Sony Music, Warner Music and EMI Group, control more than 75 percent of the music market, and users say that part of the attraction of the free service is you can find any track you want, however obscure.

"This is a one-off chance to get millions of music fans," Bertelsmann's eCommerce Group Chief Executive Andreas Schmidt told Reuters when asked if he was confident of the other music majors joining the Napster alliance.

"I think there's no other opportunity, short-term, to reach this amount of music lovers and fans," he added.

Reuters/Variety