Updated Datz Music Lounge, the all you can eat music service where you paid £99 upfront for a year's unlimited music, has closed.

The service launched last year, offering DRM-free downloads with extensive back catalogues from EMI and Warner Music. Since September 1 the site has displayed the messaged "Datz Music Lounge is currently closed" and now it appears they've lost the entire website, which reverts to the domain registrar.

One formerly happy Datz user tells us:

"I've been a subscriber since it first came out and I think I made the most of it (nearly 4000 tracks downloaded, around 300 albums), but the cracks have been showing for a little while. They lost the EMI catalogue back in June, which I thought might be the end but they still had Warner, up until a couple of weeks ago."

"Removing Warner seemed to tax them a lot, since the site went down for a few days giving an SQL syntax error (They'd added " != Warner" in the wrong place, amusingly :). When it did come back up, no album art displayed and the site became increasingly hard to use, until a few days ago when it stopped working completely."

We were unable to trace Datz Music Lounge founder Michael Richardson, who apparently moved two months ago, and the PR company briefly engaged to promote the service was no longer in contact with Datz.

Industry sources suggest the company was unable to meet the advance payments required by the majors. Paul Smith at consumer website BitterWallet has been following the saga, (see here and here,) noting that retailers including J Sainsbury are continuing to sell the dysfunctional service. But Sainsbury's aren't alone. We found half a dozen retailers continuing to sell the service, at prices ranging from £47.49 to £95.

Datz required the use of a dongle, but the songs themselves were DRM-free - so subscribers will be able to keep the music they downloaded. But Smith questions why Datz continued to sell the depleted package, knowing it had lost its major label catalog deals.®

Updated Michael Richards has surfaced at MusicWeek, confirming the closure of Datz Music Lounge. Money quote: "If Nokia or Microsoft or another of the big players came up with the Music Lounge then no doubt they would be in a bloody strong position. Unfortunately a few oiks from Oxfordshire and didn’t quite have that clout."®