Peter Kafka

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eMusic Cutting 10 Percent of Staff; Still Looking for CEO

Yet another digital company is cutting back: eMusic, the digital music subscription service, is firing “about 10 percent” of its 100-person staff, the company says.

eMusic explains the cut by offering what has become a stock answer–things aren’t terrible, but the company is bracing for a slowdown and is cutting now so it can avoid doing it later.

But eMusic chair Danny Stein, who runs the firm’s parent company, JDS Capital Management, offers some additional color: The specific problem the company is seeing is with its 2,000 retail partners–either chains like Best Buy (BBY) or electronics companies that were bundling eMusic offers with their products.

Those companies are cutting back shipments and reporting slower sales, which has been cutting into  eMusic’s subscription business in the second half of the year, he says. But traffic to has remained consistent and the company will still be able to report 40 percent revenue growth by the end of the year.

“We are expecting to grow, but we’re going grow slower than we’d hoped,” Stein says. So what about next year? “Good question. Definitely double digits.”

Stein says the company may also consider lowering prices for its subscription offering ($11.99 for 30 MP3 downloads a month), but that for now, “we’re comfortable with our pricing.”

The cutbacks come just a few weeks after CEO David Pakman announced that he was leaving to join Venrock, the VC arm of the Rockefeller family.

Spokeswoman Cathy Nevins says the eMusic is looking at a “handful of very qualified candidates” as a replacement.