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"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."
——message on the Musicbank site

MUSICBANK CLOSES DOORS

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And the moral to the story is: Even with the blessings of the Big Five, online success is not guaranteed.

That's the important lesson the folks at Musicbank learned. The online music locker service ceased operations Tuesday and dismissed its entire staff, CNET News.com reports.

"Against the landscape that the Internet's in, it's almost impossible to find funding," said a Musicbank spokeswoman, adding that the company laid off about 40 staff members from its San Francisco headquarters.

The big story here is, of course, that Musicbank had what would seem like a deck stacked in its favor. The company, formed in November 1999, had a who's who of backers, including original investors Atlas Venture, Bertelsmann Ventures, Bonaventure Investments and Universal Music Group. The company also had licensing deals with BMG, Universal, Warner Music Group, Sony Music and EMI. It had also signed on Virgin Megastores in an exclusive retail partnership.

But despite this apparent recipe for success, the company unraveled fairly quickly. Musicbank's president and chief executive, Michael Downing, stepped down in March (hitsdailydouble.com, 3/6), and the company laid off 19 of its 61 employees. The company never found a replacement for Downing.

Some of the blame could fall on the concept of online music "lockers," as well, which never caught on as a business concept as fast as some had predicted. Perhaps the growth was stunted by the legal crackdown on MP3.com's My.MP3.com, the first of such services, which cost that company millions in damages. But Myplay offered a similar service originally before cutting 41% of its staff in February and shifting its focus to creating software that lets other Web sites build their own music subscription services.

According to CNET, the Musicbank website went dark late Tuesday, save for a message, which read, in part: "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."

Attempts to log on to the Musicbank site on Wednesday were unsuccessful.

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