BitTorrent Inc., founded by Bram Cohen, the inventor of the BitTorrent protocol, is firing 12 of its 55 employees. The company, which also develops the popular BitTorrent client uTorrent, had been struggling to make money from their download store, which is one of the causes of the layoffs.

One of the main plans of BitTorrent Inc. was to be the next iTunes, by selling movies and music via their “BitTorrent powered” online store. For several reasons, DRM being one of them, the store never became the success they hoped it to be.

Valleywag reports that the company has now decided to lay off its sales and marketing department, due to failing attempts to sell the entertainment store to Best Buy. This means that the development of uTorrent, specifically the long awaited Mac version, is not in danger.

The BitTorrent entertainment network was launched February 2007 and offers movie rentals starting at starting at $2.99. Before the store launched, BitTorrent Inc’s co-founder Ashwin Navin said that the store was going to compete with BitTorrent sites like The Pirate Bay and mininova, as he said, “If we’re not competing effectively with piracy, we’re not going to win.”

There never was any real competition however, mainly because the movies are infected with Windows DRM. The company never wanted to use DRM. In fact, Bram Cohen told TorrentFreak in an interview that the DRM issue is causing an awful lot of headaches, but that most of their content partners are insisting on it.

BitTorrent’s Ashwin Navin was a bit more outspoken about it. He said that DRM is “a time bomb waiting to happen,” and that it will inspire people to pirate content. One thing we can be sure of, it didn’t help to convert illegal downloaders to go legal.

If online video stores want to compete with their pirate counterparts, the pricing should be reasonable, the catalogue extensive, and all without DRM. The BitTorrent store failed to meet these standards, and unfortunately, 12 people lost their job because of it.

Update: In a comment received after publication of the article, Ashwin Navin told TorrentFreak that the layoffs are not related to the failing entertainment store.