RapidShare lays off most of its staff as it struggles to find new business model

Maybe being honest doesn’t pay, after all: Switzerland-based file hoster RapidShare has laid off 45 of its 60 employees to cut down on costs as it tries to reinvent itself and focus more on B2B cloud storage services. The cuts were first reported by Swiss daily 20min, who was told by the company’s new CEO Kurt Sidler that RapidShare definitely won’t shut down. “Unfortunately, we have to part with a number of employees,” Sidler told the paper, adding: “But RapidShare will continue to operate, and we have concrete plans for our future.”

That future likely won’t look at all like RapidShare’s past: The company used to run the world’s most popular one-click file hoster, and was frequented by millions of file sharers looking for safer alternatives when music labels and others started to go after P2P users. However, Rapidshare quickly found itself in court, and fought long legal battles with rights holders in Germany and elsewhere.

The company tried to appease rights holders by putting restrictions on some aspects of its service; RapidShare was one of the first companies to get rid of its rewards program, which would compensate uploaders with especially popular files. It also pressured users to get registered accounts, and finally introduced bandwidth limits in late 2012, restricting users to 30 GB of bandwidth per day – not enough for people who were using the service to offer movies and other copyrighted files for download.

Rapidshare had hoped that all of these measures would get the company some love from rights holders, as it was looking to offer video games and eventually also movies through a paid download store. The idea was to redirect downloaders looking for free, unlicensed copies, and serve up legitimate content instead. However, Holllywood apparently didn’t play ball, and RapidShare nixed its plan for paid downloads at the end of 2011.

The company is now looking to get a stronger foothold in the B2B cloud storage market, and sell personal file storage and backup solutions to consumers. However, the mass layoffs weren’t the first sign that these plans may not be going as expected: Sidler, who joined the company just two weeks ago, is RapidShare’s fourth CEO since 2010.