Saying an entertainment industry lawsuit has scared off financial backers, Scour handed 52 of its 64 employees pink slips Friday afternoon.
Scour, backed by super agent Michael Ovitz, was sued in July by three entertainment industry associations, which alleged that the new file-swapping service violated copyrights by allowing users to share video, audio and other files for free.
One of the groups, the Recording Industry Association of America (RIAA), has filed a similar lawsuit against Napster.
Scour said the site would continue running despite the layoffs and that the company would continue to fight the lawsuit. Most of the job cuts were in the company's sales and marketing department.
It is believed to be the first time one of the entertainment industry's recent raft of copyright suits has prompted major layoffs.
A company spokesman said Scour's 12 remaining employees consist of executives and senior engineers, who will work to keep the site running and defend the company against the suit brought by the RIAA, the Motion Picture Association of America, and the National Music Publishers Association.
Scour is best known for its multimedia search portal Scour.net. In April, however, it launched the file-swapping system Scour Exchange, which incurred the wrath of big record and movie producers.
Scour said it would continue to work with the high-profile legal team it hired last month.
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