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Internet giant Google is considering an extensive alliance with Napster, which could include an outright acquisition, as it plots its move into the digital music world, The Post has learned.

According to sources within the music industry, Google has been pushing to align with Napster — rather than build its own online music store — a sign that Google sees subscription services, rather than the individual download model that Apple's iTunes is built on, as the future of digital music.

It has long been rumored that Google is considering expanding into digital music, but a spokesperson for Google said yesterday, "We have nothing to announce at this time."

The company denied that it plans to build its own service, but declined to comment on whether it plans to align with an existing service. "We can't provide any details related to rumor or speculation," the Google spokesperson said.

A Napster spokeswoman declined comment, citing a quiet period ahead of its earnings announcement, which will come next week.

However, last week a Napster spokeswoman told Reuters at an annual music industry conference in Cannes, France, "The company is not looking to be sold, the management is not looking to step out." Last week the company laid off roughly 10 people in middle management.

Robert Peck, an analyst at Bear Stearns who covers Google, wrote in a recent research report, "We believe Google is in the midst of creating its own iTunes competitor, which we've dubbed 'Google Tunes.' "

Peck predicted the company would roll out a music service in the next three to six months, saying such a move would be "logical" and that it "fits with Google's recent moves and its ultimate goal of organizing the world's information."

The report, released last week, prompted Apple shares to slump 2.2 percent.

Napster, created in 1999 by college student Shawn Fanning, was once the bane of the music industry when it operated as a renegade peer-to-peer service that allowed users to swap files in violation of copyright law.

After the company declared bankruptcy, the Napster name was bought in 2003 by software company Roxio, and the company reinvented itself as a legitimate music service.

Napster, which is publicly traded on the Nasdaq and has about 500,000 subscribers, narrowed its loss to $13.6 million in its most recent quarter. It reported revenue of $23.4 million for the quarter, more than double its revenue from the prior year.

The digital music world has lately seen an increase in the number of competitors. Recently, MTV said it would launch its own online music store, joining others such as Yahoo! and RealNetwork's Rhapsody and the industry-leading iTunes.

New York Post