If this is true, its a real pity. Music industry is really though business to go online. It's essentially trying to tie two very different business models together. ITunes got the magic right, but even that took a bit of wrangling.
I was pretty sure that anywhere.fm helped launch a pay service during the acquisition process. I wonder how that has contributed to help paying the bills?
They launched the pay service after acquisition, but I think it may be a little too late for the free site.