Online Music Services Firm Snocap Lays Off 60 Percent of Staff

Snocap, the music-licensing and registry company founded by Napster (NSDQ: NAPS) founder Shawn Fanning, has cut its staff by 60 percent, reports, citing the company spokesperson, confirming rumors to the effect earlier. The company’s not immune to the not-so-secret secret of the digital music industry: tough for anyone on the services side to make any money. The company has changed tracks a few times: started an an music ID/registry for P2P distribution, and when the industry didn’t take off, move to a widget-based model to sell music through social networking sites and blogs.

MySpace owns some equity in Snocap, through a distribution deal it did last year. Would be interesting see if MySpace comes outright and buys it now, to enable full-on music commerce through its network. Meanwhile, Fanning has moved on, as he usually does after stirring the pot, and has launched Rupture, a virtual social community for online gamers.

Updated: The actual numbers: reducing to about 26 people, from 57. Snocap said it has heard during the past few months from large companies that are interested in a possible acquisition of the startup. “As such, the company will continue to pursue all strategic alternatives to maximize the value of its core assets,” a company statement said.