EMI is poised to join rivals such as Universal Music Group and SonyBMG in embracing a legal version of the internet file-swapping technology behind most online piracy.

Alain Levy, chairman of EMI’s recorded music division, said the company was in advanced negotiations with Snocap — a San Francisco company launched by Shawn Fanning, the Napster founder and former internet music pirate — which has created a legal version of peer-to-peer (P2P) file swapping.

Mr Fanning has emerged as a champion of legal internet downloading by developing filtering technology that allows music companies to make money from files swapped over the internet between music fans.

“We are in discussions with Snocap. We are very close to a deal. We think it’s a very interesting technology. There’s definitely something in it,” M Levy said.

Universal Music Group is understood to have licensed its music to Snocap, which is expected to launch its service before the end of the year.

SonyBMG is in discussions with Grokster, the P2P network whose software has been blamed for internet piracy, to use its technology to promote sales. The groups are planning a venture called Mashboxx, which would allow legal file-swapping and use Snocap technology.

M Levy said that music companies had “to find a way to fulfil the demand from consumers to swap their music over the internet in a way that is legal, because it seems certain that P2P will be huge”.

But he added that while P2P would fill a gap in the market for digital music distribution, it would not replace subscription services and internet stores, such as iTunes and Napster. “Some people will want mobile, some will want to share it with their peers, the key is that we allow them all to do it while staying within the law,” he said.