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Sources: Playlist.com running low on cash

The once up-and-coming music service that helps people share their playlists has struggled to raise cash.

Playlist.com, the music service once known as Project Playlist, is low on funds, multiple music industry sources told CNET on Friday.

Just a year ago, the site could boast 38 million registered users; Owen Van Natta, a highly respected former Facebook exec, as its CEO; and Bob Pittman, the MTV and Time Warner exec, as an investor. Since then, the site has suffered through dwindling user numbers, a management shakeup, and has struggled to raise money, the sources said.

Unless Playlist.com, which enables users to create and share song playlists with friends, attracts a significant amount of investment, the sources said they expect the service would not survive till fall.

Jeremy Riney, Playlist.com founder, denied that management has any plans to shut down the service and noted that the company has put the it's legal troubles behind it.. Some of the four major record labels accused the Playlist of violating their copyright in lawsuits. Asked whether the company was in financial trouble or how long it could operate on the available funding, Riney declined to discuss specifics.

"We are not closing the doors anytime soon," Riney said. "We are trying to raise a round of financing but we have been profitable since we began."

Playlist has hoped investors would supply the shot in the arm the service needed. After more than eight months, the company has found the digital-music sector isn't as attractive to investors as it once was. Onetime high-flying companies, such as Imeem, SpiralFrog, and iLike have either gone out of business or been sold on the cheap.

In their search for funding, Playlist's leaders have met with Web giants AOL, Yahoo, and Apple, said the sources. None of the bigger companies were willing to place bets.