Santa Monica, Calif.-based Atomic Pop told employees that the layoffs were necessary for the company to restructure. One former employee told CNET News.com that the executives said the music site had run out of funding and was unable to attract new backers.
The company released a statement that was vague about its future: "In light of current market conditions, Atomic Pop has undertaken a major restructuring of Atomic Pop's business. Atomic Pop presently plans to continue operations with a significantly reduced overhead."
Al Teller, who was previously chief executive of MCA Music Entertainment Group and president of CBS Records, created Atomic Pop with aspirations of launching an Internet record label and content site. Sources said Teller was able to attract $10 million last fall.
Launched in February 1999, the company raised eyebrows in the record industry by offering artists 50 percent of gross profits in contrast to the 10 percent most record labels pay. It also allowed artists to retain the rights to their music, an agreement practically unheard of in the music industry.
Atomic Pop signed partnership deals with several well-known artists and groups, including Public Enemy, Ice T and the Pixies.