VentureBeat

Shawn Fanning, who gained fame after launching early music file sharing company Napster, is in advanced stages of talks to sell his most recent social gaming start-up, Rupture, for $30 million.

The buyer would be Electronic Arts, but unlike first reported by Techcrunch, the deal hasn’t gone through. I reached someone very close to the deal but who requested anonymity, who said “nothing has been signed, but it’s getting close.”

“Is it likely to go through?,” the source continued. “Yes.”

Finally, it looks like Fanning will hit paydirt. Napster went bankrupt after facing insurmountable legal challenges, and Fanning’s second music start-up SnoCap didn’t do very well either, and was reportedly sold for very little to imeem.

We reported on Fanning’s Rupture a year and a half ago, when it first emerged with a goal to bring social networking to popular online multiplayer games like World of Warcraft. It has stayed in a private testing mode since then, having delayed its launch, so Electronic Arts is obviously buying the company for its technology and potential. The area of online social gaming is promising because millions of gamers have formed communities with each other through playing, but their interactions have been limited by the confines of proprietary software.

With social networking and online gaming all the rage (with $1 billion in subscription sales alone), it’s no surprise that Electronic Arts, the giant game maker, which has been struggling to find itself in recent years, would be interested. EA is working on a variety of online games. The company’s Mythic division has been at work on “Warhammer Online” for four years and it expects to launch the fantasy-role playing game in the fall. Spore, another single-player game with online elements, will launch in September. But it isn’t immediately obvious whether those games could use the Rupture technology. Sometimes the technology behind a game on a major title is written in stone years before its launch.

Fanning and co-founder Jon Baudanza will both join Electronic Arts under the planned agreement.

Rupture raised about $3 million last year from Ron Conway’s Baseline Ventures, Joi Ito and Reid Hoffman among others. (Dean Takahashi contributed to this post).

Here’s the latest action:

OpenID is gaining ground — OpenID is a service that lets you use your URL as your username anytime you have to login to a site that requires username and password. Until now, it has been slow to catch on — Web sites have taken their time to allow it. But an increasing number of sites are doing so, because it’s convenient for users. Here’s how it works: You use the URL as your username as you sign in, and this triggers a request by the site to obtain your identity details that you keep safely locked up another site (your so-called provider). More info here. Microsoft recently said it will support it, AOL is now supporting it, and now Digg is too, among a long list of others.

Shawn Fanning’s new company, Rupture, goes live — The site allows gamers to network and maintain profiles based on the game World of War Craft (we reported on Rupture here). Let us know what you think.

Startupping, a site for entrepreneurs — Mark Fletcher, a successful entrepreneur, has started a web site for entrepreneurs, Startupping.com — allowing them to trade tips, resources, etc. Fletcher, you’ll recall, successfully built and sold two companies: eGroups (to Yahoo) and Bloglines (to Ask).

Trulia releases housing API – Trulia, the online real estate company, has opened its API so that anyone can build their own home price forecasting tool, heat map, or application comparing home prices and other variables. We’re not sure how widely useful this is, but there are some interesting stats emerging, such as how people pay less for homes in areas where there are more women and how more foreigners mean less crime.

Odeo, podcasting service, looking for home — This the saga that won’t go away. San Francisco entrepreneur Evan Williams bought back his podcasting company, Odeo, from investors, but has now focused his energies on an SMS service spin-out, called Twitter. So now he wants to sell Odeo, which has a respectable 3 million monthly page views, and breaking even on adsense. Notably, he asks whether there’s a marketplace where he can publicize the sale. We can point him to our very own VentureBoard, launched not long ago. Recently, SupportMagic listed itself and an investor saw the listing, and bought it. (The board’s most recent listings get mentioned on our home page.)

EU commits to halt greenhouse gas emissions, while US commits to increase them — Here’s the story on progress by the European Union countries to commit to lower greenhouse gas emissions, which has yet to be ratified by the individual countries. Too bad that the U.S. is standing still. Already the biggest polluters, we’re planning another 150 coal plants over the next few years to meet our growing energy needs, and have no agreed upon way to capture the resulting carbon dioxide before it spews into the air. Meanwhile, North Pole is seeing record levels of greenhouse gas.

Confabb, the conference social network, sells? — Rumor, at Techcrunch, is that Confabb is being acquired for $5 million or so, after just three months’ work. Not bad at all for founder Salim Ismail, who’s last company PubSub didn’t do too well. Confabb’s angel investors include Dave Winer and Andrew Rasiej.

D2C Games (also known as Bigdog Games) and Areae are two of the latest game start-ups boasting “next generation” technology, and they’ve just raised millions of dollars in venture capital.

D2C, of San Mateo, has raised $1.5 million in a first round of funding (Dan Primack broke the news), but there’s no sign it is moving in the direction of the more recent start-ups, Red 5 (see our story here) and the just-announced Areae. Both of these aim to merge multi-player games with the Internet and its full Web 2.0 glory. For now, D2C doesn’t specify what exactly about it is “next generation.”

D2C is is run by Madden Football architect and Glu Mobile founder Scott Orr, and is backed by new Silicon Valley firm Rubicon Ventures, which earlier invested a seed round of $1 million into D2C. All we know is that it is focused on “casual games for a variety of platforms.” It also is a licensed Sony publisher, and plans to offer at least two games next year. (More background on backer Rubicon, its partners Mark Wilson, Paul Sherer, potential partner Ravi Chiruvolu and their apparently tortured efforts to raise $30 million for an inaugural fund, can be found here.)

Areae, of San Diego, is also being cagy, but it is overtly trying to merge Web 2.0 with games, just like Red 5. Chief executive Raph Koster told VentureBeat last weekend he has raised a fraction of the $18.5 raised by Red 5. From the sounds of it, Areae got in the low digit millions, though Koster hasn’t confirmed. Investors are Crescendo Venture and Charles River. Koster says he’s working in the virtual world area, but cautions that its different from Second Life. He distances himself from Red 5, saying Red 5 appears to be like a traditional game development studio, allocating most of its capital to developing a single (or perhaps a couple) of titles. While Red 5 says it will take years to develop its games, Koster says we’ll be hearing from Areae in 2007.

Koster is a pioneer in the multiplayer online gaming space. He was lead designer of Ultima Online and the chief creative officer of Sony Online Entertainment, and wants to merge the Web 2.0 and multiplayer game worlds from the outset — but apparently wants to invest a lot of cash into developing a few titles. Koster shares some of his views here.

Here are a few questions we asked Raph and his responses:

VentureBeat: If you’re not developing games like Red 5, what *are* you going to do? Where are you on the spectrum between Red 5 (on the game-making side, with Web 2.0 baked in) and Shawn Fanning’s Rupture (on the full Web 2.0 side, with games backed in)?

Koster: Oh, we are firm believers in entertainment and in games. But as I have said many times before, games fit inside virtual worlds — not the other way around. I think that’s a difference from Red 5, probably. The straight-up games business carries with it so many assumptions about production styles, scope, approach, and so on, all of which are in fact already disproven by the indie games movement. The largest game world today, Runescape, is an indie, not World of Warcraft.

I would describe it as marrying the Web 2.0 elements to the game elements, rather than saying that these things are on a spectrum. Rupture seems like it’s a business layered on top of existing games, and we’re definitely interested in the games themselves as well.

VentureBeat: Where do you plan to monetize?

Koster: We’re staying quiet about that right now.

VentureBeat: If you’re opening up to Web, you’re even more vulnerable to a CopyBot, no? Where is the value?

Koster: I think I hinted at this even in the original article I did for you, in the concluding paragraph. Anything that streams is vulnerable to CopyBot. But there’s a host of things that aren’t: server-side content and value, service-level value, and so on.

Shawn Fanning, founder of the popular music file sharing company Napster, is back in the game with a new start-up.

This time, Fanning wants to bring social networking to popular online games like World of Warcraft, as BusinessWeek first reported.

Experts say this is a promising area, because millions of gamers have formed communities with each other through playing, but their interactions have been limited by the confines of proprietary software. Why not open up these interactions to the full richness of the Web, let gamers flirt with each other, communicate offline or any number of other things?

Fanning’s new company start-up, Rupture, results from Fanning’s own frustration with WoW, which has 7.5 million players. The more he played, the more of a stake he had in the game, but the more he felt hampered in organizing game playing and learning about others’ identities.

He has raised seed money from investors including Ron Conway and Joi Ito. That makes sense because Conway has backed Fanning in his previous endeavors at Napster, and subsequently at SnoCap, a music store service that recently partnered with MySpace.

There are other services that extract character names, profiles and other data from WoW and other games. But few, if any, have sought to take it to the next level, personalizing it all in other ways. Rupture will create individual and guild rankings and facilitate playing and chat, starting with WoW, but pulling in information from other games, too, according to BusinessWeek.

There are several other stealth start-ups working on this, Susan Wu, venture capitalist at Charles River Ventures, says. She dismisses concerns that they may violate WoW’s terms of service. There’s tension, certainly. The walled garden has benefits — a rich and immersive storyline in a constrained but focused environment. However, players of WoW tend to spend time outside the game interacting with their “guildmates,” but have no easy way to do that. And there are thousands of plugins that have established precedence for how services get layered atop WoW, she points out.

Check out Allakhazam (plugin info here), for example, where you can view people’s WoW characters, guild rosters and quests. There are hosting providers that provide your guild with its own Web site, with ranking, communications, and management tools.

However, most of these other services are run by small grassroots contributors, have lacked a spectacular user experience, and there’s opportunity to offer a more cohesive and more comprehensive networking toolset, Wu says. Allakhazam’s focus on extracting user content (tips, maps, strategy, quests) has, perhaps incidentally, helped bridge communications between in- and out-of-game networks (forums are a bit part of Allakhazam). But social networking, i.e., building relationships, hasn’t driven its experience. That’s apparently what Rupture wants to do. Rupture will launch sometime in the first half of next year; for now, you can request more info at the site.

Below is a screenshot of a Modded Wow interface (with numerous plugins installed):