Where will Napster's AOL deal lead?

Shares of the L.A.-based music service, which has been on life support almost from the time it went legit, jumped nearly 8 percent today on word that it will become the exclusive music provider for AOL Music, replacing AOL Music Now. That's almost 350,000 AOL subscribers going to Napster, which itself only has 566,000 subscribers. It's all pretty nickel-and-dime stuff compared with Apple's iTunes, which has 70 percent of the business. Barbara Coffey at Kaufman Bros. figures this will provide Napster with the critical mass needed to stay afloat, while Christopher Rowen of Soleil Securities says it only gives the company some breathing room and reduces the chance for an imminent sale. He's encouraging shareholders to bail after today's price jump (remember that Napster has lost hundreds of millions of dollars). Napster CEO Chris Gorog told Reuters today that the company is still talking to interested parties, so it's hard to know how the AOL deal impacts any possible sale - or whether AOL will be the eventual buyer. There have been reports about AOL working on software for a wireless music service, so maybe Napster could become its full-time music supplier.