In a sure sign of trouble for the concept of legal peer-to-peer downloading, Snocap disclosed Thursday that it was laying off 60 percent of its workforce. The rumor, first reported by Valleywag, was confirmed Friday by CNET.

The company also confirmed blog reports that it may be pursuing a sale, saying it had received some interest from several possible suitors. It was not immediately clear from where the layoffs would come.

Snocap was founded in 2002 by Napster developer Shawn Fanning. From the start, the company was fighting an uphill battle: many record companies declined to work with the man they considered largely responsible for the popularity of illicit downloads.

Much of Snocap's publicity came from the interest surrounding Fanning and his previous ventures. The service never seemed to be able to stand on its own, and has been relegated to also-ran status in the legal music downloading industry

Undaunted by these challenges and a lack of buzz, Fanning has pushed forward, most recently penning a deal with social networking site MySpace to allow artists to sell their music directly from their profile pages.

Even there, the service has gained little traction. MySpace has over 100 million registered users, but the "MyStores" concept has attracted only about 175,000 registered consumers.

Figures of songs sold via Snocap are not available, as the company has never released those details.