Reciprocal Has Ceased Operations

By Robert Menta- 11/05/01

Another dot com failure, New York-based digital rights management firm Reciprocal has shut its doors for good. A trip to the company's web site tells it all in just a few stark words "Effective immediately, Reciprocal, Inc. has ceased operations".

For those following the company, the news comes as little surprise. A little over a month ago, the troubled company slashed its workforce by 65%. Two weeks ago it defaulted on a loan to Microsoft. Being a tough year for digital rights technology companies, things were not looking good for Reciprocal and now the plug has been pulled.

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A year ago, when Napster was topping headlines things looked great for Reciprocal whose technology was courted by the record industry. But since that time the record industry has yet to develop a commercial Internet market under their control, even after effectively shutting down Napster. Delays in the release of their Napster alternatives caused the industry to lose all the ground they gained as Napster clones vacuumed up Napster's former audience .

The two industry services, PressPlay and MusicNet, have again watched their debuts delayed. Even when they do get up and running many analysts feel these services are overpriced and will not be able to compete against the free Napster clones. This unsure atmosphere has taken its toll on tech companies hoping to profit by the delivery of music file security to the record industry. Last week Reciprocal's competitor InterTrust technologies, whose technology is found in some newer MP3 portables like e.Digital's recently released MXP 100, laid off 180 workers.

Reciprocal was hoping one of the major media companies would acquire them, but a deal never came about. Microsoft now stands to inherit Reciprocal's technology.

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