Microsoft partner throws in the towel

Reciprocal, a Microsoft-backed company that sought to develop technology for protecting and managing copyrights online, has shut down, according to a message on its Web site.

The company could not immediately be reached for comment.

The announcement comes just weeks after Reciprocal defaulted on a loan to Microsoft, raising speculation that the software giant might step in to take control of the troubled company. But a Microsoft representative confirmed Friday that the company is no longer in operation.

"Reciprocal was a strategic partner, and we worked with them in their efforts to succeed," the representative wrote in an e-mail interview. "Due to slower-than-projected growth and the economic realities of today's market, Rights Solutions, which acquired the assets of Reciprocal through foreclosure, has ceased operation effective immediately. No determination has been made regarding existing assets."

Reciprocal is the latest casualty among digital rights management companies, which increasingly have retrenched or died off altogether while awaiting the long-delayed creation of a large, commercial Internet marketplace for music and other digital content.

InterTrust Technologies said this week that it would lay off 180 employees, or about 40 percent of its staff. In May, Preview Systems announced that it would sell its assets and close its doors.

Bigger companies such as Microsoft and RealNetworks now are poised to take over this crucial technology, which will underpin paid subscription services from the major record labels scheduled for launch by the end of the year.

Over the summer, Reciprocal was negotiating with a major media company in hopes of a full acquisition, said a former executive. But the deal fell through in early autumn, and the company could not raise new funds to pay off Microsoft's bridge loan.

News.com's Evan Hansen contributed to this report.