Friday will be the last day of work for most of the San Mateo, Calif.-based company's 24 workers. The two co-founders will work to shut down the company during the next month.
Xenote had about 15,000 of its iTag attachments in the market and was working with about 60 radio stations including KKSF, a San Francisco jazz station, and KRBE, a top-40 station in Houston.
Consumers could take the iTag with them and press a button when they liked a song on the radio. Once back at a computer, they could go to the Web site and get links to buy the music, hear sound clips or get other information about the song.
Mark Kaufmann, one of Xenote's co-founders, told CNET News.com that the company was still in its early stages and needed funding at a time when venture capital for money-losing consumer start-ups was drying up.
The company was founded in 1999.
The company talked to several potential partners, Kaufmann said, but most wanted to see a speedy path to profits.
"It's hard to be profitable when you are still in testing mode," Kaufmann said. Xenote had been giving away its iTag and was looking to expand its customer base as quickly as possible. The units cost about $5 each to manufacture, Xenote had said previously.
Although Xenote doesn't want its iTags back, the tiny units will become little more than a beeping toy to annoy friends or co-workers after the service ceases in a few days.
Kaufmann said Xenote's demise would have been easier to swallow if it had been the product's failure, rather than an inability to raise money, that forced it out of business.
"Consumers were really excited about the device, and they wanted the service," Kaufmann said.
Both the iTag and eMarker are designed to solve the problem of hearing a song on the radio but not knowing who sang it or how to buy it. Whether that issue is pressing enough to get consumers to carry a separate key-chain tag is still up in the air.
eMarker executives were not immediately available for comment.
Kaufmann said he didn't believe that Sony's entry into the market was a big factor in his company's demise.
"In some cases a competitor validates a space," Kaufmann said.
There have been some inquiries by companies to acquire particular assets of the company, he added.