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Compact disc replacement skips out

Start-up DataPlay, which hoped its quarter-size secure media format would replace the CD, shuts down and starts looking for a buyer.

Start-up DataPlay, which hoped its quarter-size minidisc would replace the compact disc, has shut down and is looking for a buyer.

Todd Oseth, the Boulder, Colo.-based company's senior vice president of business and marketing, confirmed that DataPlay's 120 workers were laid off late last Friday. The workers had been furloughed late last month as the company looked for additional financing.

DataPlay, which had raised $120 million from supporters including photography giant Eastman Kodak and chipmaker Intel, needed $40 million to $50 million to complete the next phase of operations.

Oseth said the company was unable to find the funding, and that plans for the new media format are on hold now, as DataPlay's board of directors searches for someone to buy the company. "It's pretty much just the board now," he said.

DataPlay's discs are about the size of a quarter, can hold up to 500MB of data--or 11 hours of music--and include security features to prevent unauthorized copying of music. Major record labels have supported the format, and DataPlay expected to have discs featuring artists such as Britney Spears and N'Sync on the market by the end of this month. The first products based on the DataPlay format--a portable music player made by iRiver and blank discs from recordable media specialist Imation--appeared on the market earlier this year.

Analysts said DataPlay lacked the most essential asset for anyone hoping to popularize a new media format: support from major makers of consumer-electronics equipment. Japanese electronic giant Sony and Dutch conglomerate Philips Electronics were the main proponents of the CD format in the 1970s.

Philips is now working on its own minidisc storage product, based on DVD-recordable Blu-ray technology. The discs are a little more than an inch in diameter and can store up to 1GB of data. Typical CDs, measuring almost 5 inches in diameter, can hold up to 650MB of data. The new Philips drives and media are in prototype stages, but the company plans to use them in portable devices such as digital cameras, handheld computers and cell phones.