Rupture

Shawn Fanning Finally Gets A Real Payday: Electronic Arts Buys Rupture For $30 Million

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[Update 8/4/08: The acquisition price subsequently reported by EA is $15 million, not $30 million. But that amount does not include any additional earnout for the founders].

Shawn Fanning, best known for founding Napster, has a new job. He will be working at Electronic Arts, which is about to buy his social-network-gaming startup Rupture for $30 million, according to sources with knowledge of the deal. His co-founder Jon Baudanza will also join Electronic Arts. We first heard of a possible deal back in February, but did not know who was the buyer. Rupture’s first product was a social network for players of the online video game World of Warcraft, but it only came out with a beta version and kept delaying its public launch.

Electronic Arts is buying the company for its technology, since it doesn’t have a lot of users (it was only ever in beta) and never launched the second version of its service. Presumably, creating social networks around massively multiplayer video games is a key component of its online strategy. The company has not yet officially announced the acquisition, but it is expected to do so soon. [Update: The closing of the deal is imminent, but there are still some papers to sign].

Rupture had previously raised only $2.5 to $3 million in an angel round last summer from investors including Ron Conway, Joi Ito, Reid Hoffman, and Baseline Ventures. Although this is not Fanning’s first startup, it is his first real payday. Napster helped change the music industry, but it went bankrupt doing so. And although he just sold his second startup SnoCap to Imeem, that was more of a mercy acquisition. It is doubtful that he made more than a few pennies on that sale. You know what they say. Third time’s the charm.

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