A few weeks ago, Snocap — the music 2.0 service that Shawn “Napster” Fanning co-founded after recovering from the wounds inflicted on him by the record industry — went down in flames, letting go 60 per cent of its staff and hanging a “for sale” sign on the door. Valleywag noted at the time that this came not long after the failure of a joint venture with CDBaby.

In the Valleywag post, CDBaby CEO Derek Silvers was quoted as saying that he would have more to say about the collapse of the deal at some point in the future — and that point arrived this weekend, when he wrote a long post describing what happened. To put it mildly, it sounds like a complete and utter train wreck.

Not only does it sound like Snocap couldn’t make up its mind what its business model was going to be, but according to Silvers’ description the company changed the terms of its deal with CDBaby.com after more than two years of negotiations, and effectively tried to do an end-run around the company in order to get artists to sell their songs through Snocap’s widgets on MySpace.

All the while, he describes a painfully dysfunctional relationship in which CDBaby had little control and Snocap couldn’t get its act together. No doubt there is another side to the tale, and perhaps Snocap or Fanning will be prepared to tell it at some point.

But the most damning part of Silvers’ post is the part about how much revenue the company saw from its deal with Snocap: a total of just $12,000 over eight months. And in just three weeks of having a “download mp3″ button on its own stores — without even advertising it — CDBaby sold more than $110,000 worth of music. Ouch.

(On an unrelated note, CDBaby has one of the best “your order has been shipped” emails I’ve ever come across).