Napster has laid off 30 employees, its third round of job cuts since October.
In a statement, chief executive Konrad Hilbers said the company remains committed to launching a revenue-generating, membership-based service.
However, he said it needed to further streamline its operations.
He commented: "We have full confidence that our remaining team can provide the strategic know-how and technical guidance to effectively prepare for the launch of the new service."
No date has been set for the launch, which originally was scheduled for last summer.
The company is battling copyright infringement lawsuits and trying to reach licensing agreements with major record labels.
It's not clear how many employees remain at the company. Last month, 10% of the work force was cut. In October, 16 employees were let go.
Napster's free online trading service, which allowed users to trade digital music files, has been offline since July.