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Rhapsody Cuts Staff as New Investor Arrives

Rhapsody, the digital music store subscription service has cut 15 percent of its staff, including its CEO, Jon Irwin.

Rhapsody International, the service’s parent company, announced the changes yesterday in relation to their new investor, Columbus Nova Technology Partners. They have become an important shareholder in Rhapsody in exchange for an undisclosed investment.

The pioneers of the digial music subscription model struggle to remain competitive, in a crowded market heavily dominated by Spotify. The job cuts will only affect staff in the US, and in terms of the company worlwide, only 200 employees will remain, a spokeswoman said.

Rhapsody announced it wanted to “accelerate its efforts in Europe and emerging markets.”

Rhapsody began in 2001 and was one of the first services to sell monthly subscriptions for access to huge libraries of music for streaming online. Ten years later, they bought Napster, which at the time, was its competing service. With more than one million subscribers, the company has not announced specific numbers since it brought Napster in late 2011.

The popularity and rapid growth of Spotify – which has a free version supported by advertising and a paid tier – Rhapsody has fallen behind.

“Rhapsody International is poised for tremendous growth,” Mr. Epstein said in a statement. “We’ve recently launched the Napster music streaming service in 15 additional countries in Europe, rolled out a partnership with MTV in conjunction with German wireless carrier ePlus and have a strong pipeline of product innovations and global partnerships in place.”

The news of the dismissal’s was first reported on technology news web site, The Verge.

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