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Liquid Audio to cut staff by 40 percent

The online music software and services company will slash 40 percent of its work force, or 78 employees, in an effort to stay afloat through a stormy market.

Online music software and services company Liquid Audio said Tuesday that it will lay off 40 percent of its work force in an effort to stay afloat through a stormy market.

The Redwood City, Calif.-based company said it will reduce its staff across all departments and merge its three offices into one location. A representative said the company will lay off 78 employees out of its staff of 195.

Liquid Audio joins the growing list of companies that have scaled back staff and taken other cost-cutting measures to ride out the dot-com slowdown.

Online music companies have been especially hard hit. Last month, Sonicnet, the music news and radio Web site owned by Viacom's MTVi Group, trimmed its staff. In January, music retail site CDNow cut its work forces and EMusic laid off more than a third of its employees.

Gerry Kearby, chief executive of Liquid Audio, said the company aims to preserve its cash as well as focus on the emerging digital subscription business.

"We have restructured the company to more effectively address the technological needs of this marketplace," Kearby said in a statement. "Accordingly, the company is de-emphasizing its efforts in noncore business areas, including kiosks and other micro-businesses."

Online music has been evolving from free to paid services. Last month, Warner Music Group, EMI Recorded Music, BMG Entertainment and RealNetworks said they would create a new company, MusicNet, to develop a music subscription service. In addition, MTVi and infrastructure company RioPort teamed to offer paid song downloads through MTVi's Web sites.