Loudeye to spin Sony Music samples

The nonexclusive deal allows Seattle-based Loudeye to offer samples of Sony songs and thumbnail pictures of album covers from the entire catalog of the major record label. Loudeye will then provide the samples to third-party Web sites for distribution.

The agreement comes amid a restructuring of Loudeye. In April, the company slashed 45 percent of its 300 employees and closed several offices. The company said that the restructuring will save it $12 million in cash annually but that it would incur a charge of $2.5 million in the second quarter.

In March, John Baker replaced David Bullis as the company's chief executive. Bullis resigned to pursue family and personal interests.

Loudeye helps media companies convert their audio and video into digital format for distribution. Its other partners include Bertelsmann's BMG Entertainment, EMI Recorded Music, AOL Time Warner and Vivendi Universal's Universal Music Group.

But like many online music companies, Loudeye found its efforts stalled when free file-sharing service Napster burst onto the scene. Napster has since been reprimanded by a federal court, which has forced it to block all copyrighted song titles provided to them by the record labels.

Since the record companies' series of court victories over Napster, many of the labels are going back to square one with their online-music initiatives. Loudeye executives have said that Napster's legal grounding is a good sign because many labels, such as Sony, have turned to them for technical assistance.

Shares of Loudeye rose 6 cents to $1.16 a share in midmorning trading. That's down from a 52-week high of $23.88.