This is the way App.net ends: Not with a bang but a whimper

App.net, the famed haven for disgruntled Twitter developers, can no longer afford full-time employees.

Founded by former Facebook developer Dalton Caldwell, App.net managed to crowdfund $500,000 in capital from eager developers. The network first emerged in reaction to Twitter’s drastic API policy changes, which led to the demise of many third-party applications and services. Caldwell promised an ad-free social network built with developers in mind. Later, it raised $2.5 million in financing from the Silicon Valley godfathers at Andreessen Horowitz.

Yet, despite all the buzz, interest in App.net fizzled.

Today, App.net shared bad news following the service’s first major round of subscription renewals: “The renewal rate was not high enough for us to have sufficient budget for full-time employees,” the company shared. “After carefully considering a few different options, we are making the difficult decision to no longer employ any salaried employees, including founders.”

App.net does, however, have enough capital to “continue to operate normally on an indefinite basis” and plans to “employ contractors for help with support and operations.”

Meanwhile, App.net is open-sourcing a blogging application dubbed “Alpha.” Although the announcement was made optimistically, it reads like an obituary:

The market conditions that were the driving force behind App.net’s creation have not changed, if anything, there is more of a role for a social platform like it. We would like to thank the developer and member community for taking App.net from just an idea two years ago to a fully realized service today. Needless to say, it’s been humbling for all of us on the App.net team to have the support of so many amazing people.

App.net is following the footsteps of other audacious Twitter competitors, including Heello, the fallen creation of Twitpic founder Noah Everett. The open sourced code, the firing of founders, and the general public disinterest all suggest its downfall.