MacRumors.com

Despite Napster's popularity at select colleges, it appears that the relauched Napster service is having some difficulties.

This Mercury News article reports that besides losing money, several executives have left and a round of layoffs began on Wednesday.

According to record label sources, Napster only sells approximately 1/4 of the songs that iTunes does.

Of additional interest is that the surprise Apple-HP deal announced in January was originally Napster's partnership:

But in the days leading up to Napster's re-launch in late October, HP suddenly -- and without explanation -- returned Napster's $250,000 check and canceled the agreement to install a link to Napster's online music service on its computers.

Napster's chief executive Chris Gorog, however, remains upbeat about the company's prospects and points to retail partnerships, pre-paid cards, and their European launch.