The service hoped to avoid copyright hurdles

The Massachusetts Institute of Technology students planned to send the music by cable instead of the internet.

The duo were hoping to pay lower copyright fees by keeping their network off the internet.

But the system was closed on Friday after just five days, after a dispute over licences for the music.

Students Keith Winstein and Josh Mandel said they had negotiated for the Harry Fox Agency, a licensing arm of the National Music Publishers Association, to issue a licence to a Seattle-based company called Loudeye.

Loudeye would then sell the school thousands of MP3 files for the collection, which could then be distributed to dormitories via its cable TV system.

But the Harry Fox Agency insisted no such licence has been completed, while Loudeye said it had been.

The college has now closed down the network while it checks the system is legal.

'Mistaken assurances'

MIT said Loudeye has assured it that it was authorised to sell music - but later "informed us that some of their assurances may have been mistaken", the college said in a statement.

Record label Universal had raised objections to the scheme, and said it was "unfortunate" the college had "launched a service to avoid paying recording artists, union musicians and record labels".

"Loudeye recognised they had no right to deliver Universal's music to the MIT service, and MIT acted responsibly by removing the music," the statement continued.

"MIT has now contacted us and apparently recognizes its responsibility to compensate creators for the use of their works. Universal looks forward to discussing how to make that possible."

MIT said it continued to be "committed to developing a fully-licensed service".

Keith Winstein said he was confident the situation would be resolved.

"We have taken it down temporarily to show good faith and because the whole point is to be very, very careful and obey the copyright law," the 22-year-old said.