Garageband unplugs site

Garageband posted a message on its Web site Friday saying one of its major distribution deals has collapsed, forcing the company to preserve its cash and take its site offline. The announcement follows a recent round of layoffs.

"We're going through a rough period right now at Garageband," the message said. "It goes without saying that it's difficult to be in the record business without releasing records."

Launched with fanfare in 1999 and backed by VC firm New Enterprise Associates, Garageband's site aimed to help bring up-and-coming bands into the radar screen of music fans. Garageband's three founders--Talking Heads' Jerry Harrison, former Washington Post rock critic Tom Zito, and Amanda Lathroum Welsh, former head of Netcenter, a division of Netscape Communications--discovered 12 aspiring bands and produced 12 CDs.

The cutback announcement comes as the dot-com sizzle has turned into fizzle for many music-related businesses. Two years ago, would-be online label Riffage.com made waves when it bought San Francisco's Great American Music Hall and an independent record label, 1500 Records. Although giants such as Bertelsmann Ventures, America Online, and BMG Entertainment backed the company, it ran out of funds and shut down several months later. Riffage's online assets were then acquired by Loudenergy.com.

"It's tough for any independent label considering the dynamics of the music industry these days and operating on slim budget," said Susan Kevorkian, research analyst at IDC. "Using the Internet as a medium and having Internet-based companies enter the music distribution and the music industry, we're still a long way from seeing a critical mass of established sites and established businesses."

If Garageband's current deal falls apart, and it has no other means of funding, it said it will close up shop and return the master CDs to the bands. As for the meantime, the company is crossing its fingers and has set up a site where people can exchange ideas and "stay in touch."

"We're a new kind of record company that basically believes by using the Internet to do research you can operate in a much more efficient way both in terms of finding bands that have a higher probability of becoming successful and then in fashioning marketing plans to introduce those bands to consumers," Garageband CEO Tom Zito said. "It's an idea whose time has come, and if we're not successful at accomplishing what we set out, somebody else will."