Multimedia Firm Scour Lays Off 52 of Its 70 Workers

Scour Inc., the controversial Beverly Hills multimedia company backed by former super-agent Michael Ovitz, edged closer to becoming the latest victim of the “dot-com” crash, announcing Friday it was laying off 52 of its 70 employees.

The company had been searching for additional financing over the last few months, but officials said a lawsuit filed against the company in July by the Motion Picture Assn. of America and the Recording Industry Assn. of America, had essentially scared off potential investors.

With little money left and mounting legal bills, Scour cut its staff to the bare minimum to keep its Web site alive.

Most of the employees laid off were part of the engineering staff and were developing the next versions of Scour’s multimedia search and swapping technology. Its Web site, which attracts 3 million individual visitors each month, will continue to operate.

The company issued a statement late Friday saying that it still believes it can defeat the lawsuit and eventually secure more funding.

But it also recognized that “it is the David and the motion picture and recording industries are the Goliaths.”

“We remain hopeful that our dispute will come out the same way that the original David and Goliath battle did,” said Dan Rodrigues, Scour’s president and chief executive.

Analysts were more skeptical about the company’s future.

“At this stage of the game, any other investors are going to be very shy about [investing in this company] until this legal question is handled,” said Tim Bajarin, chief analyst at Creative Strategies.

Rob Enderle, an analyst for Giga Information Group, said that Scour is being hit by the broad backlash against companies that facilitate the swapping of copyrighted music and entertainment computer files--a technology best known as the engine behind the popular Napster song-swapping software.

“It’s more of a timing issue than anything else,” Enderle said. “We are going through a period where we’re exploring the limits of what you can share and the strength of the current legal system’s ability to prevent the pirating of intellectual property.”

If Scour could find a way to operate overseas, they might be able to “grow to a point where they can at least sustain these kinds of legal challenges,” Enderle said.

But it is unlikely anyone would want to buy Scour now, Enderle said. The employees are the most valuable asset, he said, and most of them have been let go.

Bajarin said the only remaining valuable piece of the company may be its database of customers, which could be attractive to an investor or buyer.

Scour was created in 1997 by a group of UCLA students who developed a computerized search engine that hunted for multimedia files, such as music, video and pictures.

Like traditional search engines such as AltaVista, Scour’s engine uses robotic software agents, known as “bots” or “spiders,” to crawl through computer networks and scoop up information.

Building on its search-engine technology, the company later created a music-swapping service that, like Napster, allowed millions of people to swap pirated music for free.

Scour’s service, called Scour Exchange, quickly became a popular destination on the Internet, boasting millions of users.

The buzz about the young company attracted the attention of Ovitz and the Yucaipa Cos., the investment vehicle for supermarket magnate Ronald Burkle. Together they took a majority stake in Scour in 1999 and moved the company’s offices to Beverly Hills.

The lawsuit against Scour was filed by a veritable who’s who of the entertainment industry--an uncomfortable situation for Ovitz.

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Times staff writer Ashley Dunn contributed to this report.