BIG RECORD LABEL HOPES TO TOP CHARTS WITH AOL.

Byline: P.J. Huffstutter Daily News Staff Writer

Marking the first partnership between one of the world's largest music companies and this country's biggest Internet service provider, BMG Entertainment North America announced this week that it will include software on its audio CDs that will allow customers to sign up with America Online.

The partnership is designed to draw music fans on line and into BMG-run sites on the World Wide Web, said Kevin Conroy, senior vice president of marketing for BMG Entertainment North America.

Rap act Wu-Tang Clan's June release on New York-based Loud Records, titled ``Wu-Tang Forever,'' will be the first BMG-distributed title to carry the software. No additional releases on BMG's other labels - which include Arista Records, RCA Records and The Windham Hill Group, among others - have been announced.

In the past, other record labels have bundled software from smaller Net providers on their discs. Epic Records linked rock band Korn's album with the on-line service GNN, while Loud Records partnered its artists with the Pasadena-based Earthlink Networks last fall.

``We switched over to AOL because BMG distributes us and we wanted to work with a service that has a larger membership base,'' said Loud Records' Steve Rimland, senior national director of new media and retail promotions for the hip-hop label.

With the BMG-AOL deal, the music company gets a paid bounty for each person who uses the audio CD to sign up for on-line service. Staffers at both BMG and AOL declined to discuss the financial specifics of the deal, but ``everyone gets a cut,'' Rimland said.

``Our view was it made a lot of sense for us to help bring our customers to the Internet and to ensure their experience would be a positive one,'' Conroy said.

Though a seemingly smart marketing move at a time when record sales are sluggish, executives at other music companies warn that fans could blame on-line technical problems on the artist rather than AOL.

The service has been besieged by complaints and lawsuits since it unveiled its flat-rate fee in December. Subscribers have complained that AOL has been inaccessible because the company signed up more members than its hardware could handle.

``If you buy a Notorious B.I.G. record and keep getting a busy signal, you're going to blame AOL,'' said Jim McDermott, vice president of new media technology for Polygram Group Distribution. ``But you could also blame the record company and wonder why your favorite artist is endorsing this service. If there's one thing the music industry doesn't need right now, it's a bunch of angry consumers.''