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Music security company cuts staff by a third

Supertracks, a provider of secure Internet music distribution services, says it has laid off 40 employees, or a third of its work force.

Supertracks, a provider of secure Internet music distribution services, today said it has laid off 40 employees, or a third of its work force.

The cuts fell nearly across the board, according to Kelly Stremel, a company spokeswoman. She said marketing, administrative and business development staff were affected, but the company's core software engineering team was left intact.

"The music industry isn't moving as quickly as we had expected" to embrace online music distribution, she said.

Stremel refused to discuss the company's financial position, noting that Supertracks is a privately held venture.

Supertracks is the latest company seeking to tap the nascent market for online entertainment that has found itself facing a round of belt-tightening as investors grow impatient for profits. Yesterday, pioneer Webcasting company Pseudo Programs ceased operations, putting its staff of about 180 employees out of work.

That high-profile failure followed layoffs by companies including Shockwave.com and the collapse of celebrity-backed Net entertainment start-up Pop.com and of the Digital Entertainment Network.

The layoffs at Supertracks could signal that recent financial troubles at cutting-edge media companies will reach beyond risky content plays to technology infrastructure companies.

Supertracks is one Napster wildfireof a handful of "digital rights management" companies that hopes to capitalize on digital music distribution by offering record labels, music retailers and others a way to sell music downloads while fending off online piracy.

Record labels are partnering with DRM companies to develop secure digital distribution networks in a bid to stem the unauthorized spread of music tracks unleashed by the popular MP3 file format. The Recording Industry Association of America and some recording artists have filed lawsuits targeting companies they say are facilitating music piracy through the use of MP3s, notably the Napster music-swapping community.

Supertracks partnered with "Big Five" record label EMI Recorded Music this summer to provide secure download technology for a digital distribution experiment, in which 100 songs were made available for purchase over the Internet.

It has also partnered with a slew of music retailers, including BestBuy.com, CD Plus.com, CDNow, Chapters Online, HMV.com, Music World, Musicland (SamGoody.com, Suncoast.com, MediaPlay.com, OnCue.com), SamtheRecordMan.com, TWEC.com and Virgin JamCast.

Stremel said the layoffs are aimed at shaving costs and do not indicate the company is in trouble.

"The company is still strong," she said.