Seattle-based Loudeye, a developer of back-end digital music technology, said today that a deal has fallen through to create an already delayed custom digital music service for a North American retailer. Loudeye didn't say which retailler, but Internet message boards were buzzing that the customer was Target stores. Loudeye and the retailer have terminated their contract.

Loudeye also said it would consolidate its digital media store service at its European headquarters in the United Kingdom, but it would continue to operate its digital media content services in Seattle. Europe is generating all of Loudeye's revenue for its digital media store services, and those services make up 80 percent of the company's total fourth quarter revenue.

I've asked Loudeye to comment on Seattle-specific reductions in headcount, but it doesn't look like the company is saying much beyond its press release.

These moves, in addition to Loudeye's previously announced exit of its Overpeer content protection business, will save the company $2.5 million a quarter, the company said.

Loudeye also said its fourth quarter revenue would be $8.8 million, up from $5.5 million for the year-ago period, and that it would have a net loss. The company plans to release more detailed financial results for the quarter and for 2005 on February 23.