"Against the landscape that the Internet?s in, it?s almost impossible to find funding," Musicbank spokeswoman Colleen Gallagher said. She said the company laid off about 40 staff members from its San Francisco headquarters.
Late Tuesday the company's Web site went dark, except for some white lettering announcing the closure: "For over a year Musicbank has pioneered efforts to unite music lovers with their CD collections online. We are sorry to say that we are closing our doors...Thank you for all your kindness and support, we love you for it."
Musicbank, formed in November 1999, beta-tested its Web site for five months but never introduced a commercial service. Its site was designed to act as a "storage locker" for consumers to access their personal music collections.
The company made a name for itself late last year when it co-sponsored two lavish fund-raisers that featured live performances by Motown legend James Brown and rock band Blues Traveler.
The company had several high-profile relationships and backers. Original investors included Atlas Venture, Bertelsmann Ventures, Bonaventure Investments and Universal Music Group. The company also had scored coveted licensing deals with BMG Entertainment, Universal Music Group, Warner Music Group, Sony Music Entertainment and EMI Recorded Music. In addition, it signed on Virgin Megastores in an exclusive retail partnership.
Despite its makings for success, the company started unraveling earlier this year. In March, Musicbank Chief Executive Michael Downing stepped down from his positions, and the company laid off 19 of its 61 employees. The company had not found a replacement for Downing.
Musicbank?s business had also come into question because similar online services hadn?t caught on with consumers as fast as some had predicted. As a result, companies with competing music-locker services shifted direction. In February, Myplay cut 41 percent of its staff to shift its focus to creating software that lets other Web sites build their own music subscription services. MP3.com, meanwhile, has paid millions of dollars stemming from copyright lawsuits over its service.