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).

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):