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Loudeye trims staff, offices in restructuring

The digital media company says it will slash 45 percent of its 300-employee work force and close several offices to cut costs and integrate recent acquisitions.

Digital media company Loudeye Technologies said Wednesday that it will slash 45 percent of its 300-employee work force and close several offices in an effort to cut costs and integrate recent acquisitions.

The Seattle-based company is making the cuts as part of an effort to restructure its operations, consolidate its media services, and focus on new business initiatives, the company said in a statement.

The restructuring effort is expected to be completed later in the second quarter and to produce an annual cash savings of about $12 million. The company also said it expects to record a charge of about $2.5 million in the second quarter related to these changes.

The move comes just one month after Loudeye appointed John Baker to be its president and chief executive.

Loudeye, which helps companies put video and audio into a digital format and distribute it, said it is integrating the recent acquisitions of DiscoverMusic, another Seattle company that provides databases of song samples and album-cover art, and certain technology assets of OnAir Streaming Networks, a developer of online radio applications.

The company said it's working to focus resources on marketing these merged technology offerings and on exploring new business strategies that enable the delivery of digital music. It said new products, alliances and acquisitions connected to the service will debut in coming weeks.

Loudeye has struck numerous deals with major media companies such as Bertelsmann's BMG Entertainment, Sony, EMI Recorded Music and AOL Time Warner to convert their audio and video content into a digital format. It also has deals with AOL Time Warner's Warner Music Group and Vivendi Universal's Universal Music Group to encode their song libraries and store them for online distribution.

These arrangements come as record labels look to sell their content over the Internet in digital formats. The record industry's efforts were stalled, however, mainly because of the popularity of Napster, the free file-sharing service that they are suing for alleged copyright infringement.

Napster has since been handcuffed by a federal judge who has ordered the company to block the swapping of copyrighted songs identified by record companies. On Tuesday, the judge criticized Napster, calling its blocking efforts to date "disgraceful."

Since the record industry's court victories against Napster, companies have begun pushing full-force into selling songs over the Internet. Last week, Warner Music, BMG and EMI teamed with streaming media company RealNetworks to create a music subscription service called MusicNet. Shortly after that, Universal and Sony Music Entertainment's subscription service, Duet, struck a deal with Yahoo to offer music subscriptions through the Web portal.

The labels have also begun opening their music vaults for song and album sales. All five of the major record companies last week agreed to license their downloadable song libraries to RioPort, a music infrastructure company. RioPort will then allow Viacom's MTV.com and VH1.com to sell the labels' songs and albums through their sites. The music will be priced comparably to traditional CDs.