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EMusic prepares layoffs, restructuring

The Web site, which sells direct digital downloads of music, says it will lay off more than a third of its staff as part of a new round of restructuring.

EMusic, a Web site that sells direct digital downloads of music, said Friday it would lay off more than a third of its staff as part of a new round of restructuring.

This is the second round of layoffs for the company within the last year. Close to 20 percent of the staff was cut last June.

EMusic has been hard hit by twin market forces undermining two of its core revenues streams. A decline in Net advertising has withered revenues at its RollingStone.com site in recent months, executives said. At the same time, actual sales of music have been hurt by the widespread availability of free music online through file-swapping services such as Napster and Gnutella.

"We have taken today's actions in order to withstand the combined effect of widespread illegal distribution of digital music and the significant market decline for Internet advertising," EMusic Chief Executive Gene Hoffman said in a statement. "We cannot ignore the external challenges we continue to face."

The company has tried to defend its business in the courts and in the marketplace, offering software that identifies and blocks songs being shared by Napster members and joining the chorus of suits against MP3.com.

As a part of the restructuring, the company said it will focus its resources more heavily on the EMusic.com download site and the RollingStone.com site. That could be bad news for its other brands, which include DownBeat.com and the Internet Underground Music Archive (IUMA), one of the first sites to provide downloadable music online as far back as the early 1990s.

Several top executives will ultimately leave the company, including Chief Financial Officer Joseph Howell and General Counsel Peter Astiz, although Astiz will serve in a "transitional" role for now, the company said.

As of the end of 2000, the company had about $16 million in cash and cash equivalents on hand. In the third quarter of that year, the company posted a net loss of more than $17 million, on revenues of about $4.6 million.

A total of 66 employees will be cut, the company said.