A US report claims Napster has quietly sliced 10 per cent of its workforce.

Digital Music News claims the company applied the lay-offs within the programming and marketing divisions, citing "sources".

Employees had no warning of the execution.

Napster earlier this month denied it had plans to shed staff, revealing that the company's total subscriber base had doubled since last year.

A Napster spokesman told Macworld: "Consolidating the Napster subscription service with our new Napster.com initiative has resulted in approximately ten middle management redundancies world-wide and no additional reductions are contemplated."

Despite the cuts, the report says upper management are resolute the sackings don't reflect any larger trend, and insist the company isn't up for sale.

"Napster projects its headcount will actually increase over the coming year as our new Napster.com products enter the marketplace. Rumours of major or significant layoffs were misleading and greatly exaggerated and efforts to sell the company are patently untrue," the spokesman insisted.

However, some sources say that many of the existing digital music companies are facing crisis.

This is partially due to the continued domination of iTunes. It is also due to label demand that the advances paid for the rights to distribute their catalogue rises to levels that cannot be sustained by smaller digital music services at present.

Whether the nascent digital music industry is hitting a wall of early consolidation, or not, Napster remains resolute that its future remains safe: "We suggest that 100 per cent year-over-year revenue growth, 500,000 subscribers and the number two market share position in the industry should speak for itself in terms of the company’s health and prospects," the spokesman said.