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Napster Starts Layoffs
Wednesday, January 25th, 2006 at 11:40 AM - by Staff
Napster just finished laying off about ten percent of its workforce, according to Digital Music News, indicating that the online music subscription service may not be performing as well as it previously stated. The former employees were all released from the programming and marketing divisions.
Top management is apparently advising the remaining staff that the layoffs are not part of a larger trend, and that Napster will not be liquidated. Prior to these layoffs, however, the company also denied rumors that it was planning on eliminating part of its workforce.
Napster uses a music subscription model that requires users to pay a monthly fee, or lose their music. The iTunes Music Store (iTMS), in contrast, sells songs as individual downloads that users pay for only once. Many music listeners prefer Apple's model since they get to keep the music they purchase, and aren't required to pay monthly subscription fees.
Pressure from the iTMS success has already pushed several players out of the online music market, and analysts are speculating that now Napster is feeling the heat.
The iTMS ranked as the number two online music reseller in December.
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