Online music swapping service Napster has laid off a third of its staff as it struggles to relaunch in the face of continuing opposition from record labels in the US.

Many commentators doubt it will ever relaunch as an online service, despite last week's announcement that German media giant Bertelsmann was to buy the company outright.

"We remain committed to launching our secure membership based service but we're faced with the hard decision to further streamline our operations. As a result, we have laid off 30 employees," said the Napster chief executive, Konrad Hilbers.

The is the second time in a month the company, which is trying to save money as a result of several legal battles, has had to axe staff.

Industry sources are now questioning whether the site, which has been offline for almost a year, will ever relaunch as a legal music download service.

Last month a US judge upheld a ruling that stated the service cannot go live until it has removed all copyrighted material.

Bertelsmann, which has already backed the service to the tune of £59m, is hoping to take over Napster but is being hampered by a dispute between venture capitalist Hummer Winblad Venture Partners and John Fawning, the uncle of Napster's founder, Shawn Fawning.

Two consortia set up by the major record labels are launching their own subscription based download services, PressPlay and MusicNet, but they have not been as popular as expected and have suffered from technical problems.

Meanwhile, peer to peer services such as AudioGalaxy continue to enable users to swap illegal music files between one another's computers. The system makes it much harder for record companies to take action because the tracks are not held in any one place.

Copyright control continues to pose a massive problem for record companies, which are also suffering from declining worldwide sales.

Earlier this week Sony discovered tracks from the new Oasis album, which is not due for release until July, were freely available on the internet.