A leading U.K. analyst suggests that this week's collapse of the U.K.'s first legal file-sharing music and entertainment service, Wippit, proves that complying with rights-owners demands does not always pay off.

The service's founder Paul Myers, who stepped down from his post as Wippit CEO last year, "was a first mover in the Internet-access business, who played by the rules and paid a price for that," U.K.-based Jupiter Research senior analyst/director Mark Mulligan tells Billboard.biz.

Wippit announced its closure Sept. 3 on its Web site through a statement saying: "After eight years of pushing digital boundaries, Wippit can no longer compete in the current climate."

Mulligan suggests Wippit suffered from Myers' decision from day one to stay firmly on-side with labels, rather than adopting the tactic of certain other services of launching an illegal offering first then using an established audience as leverage to get label licenses.

Mulligan also posted a note on Jupiter's Web site (www.jupiterresearch.com) saying that Myers "ultimately didn't get the licenses he needed and Wippit was left as a well-meaning but ultimately compromised offering that never really managed to achieve mass-market share."

Myers, an entrepreneur who co-founded the U.K.'s first free Internet service provider X-stream, launched Wippit in 2000 with catalog from the four major labels and indies. He could not be contacted for any comment on job losses or the financial implications of the closure.