Online music service Napster Inc. said on Tuesday its quarterly results should exceed its prior outlook, helped by the integration of more than 225,000 AOL Music Now paid subscribers into its service.

The news saw shares move up more than 7 percent in early trading on Nasdaq.

The Los Angeles-based company said that for the fourth quarter ended March 31, it should report more than $28 million in revenue and more than 830,000 paid subscribers.

In February, Napster said it expected fourth-quarter revenue to exceed $26 million and operating expenses to decline on a sequential basis.

Napster also reported internal growth of 40,000 net paid subscribers during the quarter.

In January Napster reached a deal to become the exclusive online music subscription service to AOL, the Internet division of Time Warner Inc., and it said the deal would result in record subscriber levels by the end of fiscal 2007.

The company said it believes it is now the largest on-demand music subscription service, overtaking RealNetworks Inc.'s Rhapsody subscription service.

Napster is set to release financial results on May 16.