Rhapsody, a joint venture of RealNetworks and MTV, layed of 12 people or 9% of the staff of the music subscription service. RealNetworks had already cut  8% of overall staff in December.

In an earnings report last week, the company reported that it had lost 50,000 of its 800,000 subscribers in the previous quarter and blamed credit car ddefaults caused by the slumping economy.  But whatever the reason, the news is not good for the paisd subscription music sector which has always struggled to gain traction. And all this bad news comes prior to ad supported competitors like Spotify and perhaps Miscrosft entering the U.S. market.