The first sentence of the LA Times story: “Shawn Fanning…has finally earned some money.”

The title of our post a month ago: “Shawn Fanning Finally Gets A Real Payday…”

They did add a link to the story giving us some credit for breaking it, albeit with a statement suggesting we hit the trigger too soon: “When the widely read blog TechCrunch wrote two weeks ago that gaming giant EA had bought Rupture for a reported $30 million, it wasn’t true. But it is now.”

Here’s the very short EA press release on the deal.

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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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We’re shaking trees to find out the buyer and size of the transaction. But Fanning, who founded Napster, is having a good month. Just a few days ago we reported that his other startup, SnoCap, was acquired by Sequoia-backed Imeem.

Rupture has been tight lipped about releasing any information at all about the company, but as far as we can tell they raised just a single round of angel financing, in 2006. More as this develops.

Update: A source close to the company says we jumped the gun on this one a little bit, and that negotiations are still ongoing. No term sheet has been signed, although there are discussions going on. Also, the company raised another round of capital over the summer. Baseline Ventures led that round.

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The prospect of founding a successful generic social network these days might be bleak given the dominance of players like MySpace and Facebook. However, there’s still plenty of room for niche social networks to rise and generate lots of participation.

UGAME, which enters closed private beta this week, wants eventually to be the leading social network for gamers. The site will start off as a place where competitive PC gamers in particular can socialize, share their gaming feats, and organize themselves into teams and other associations. While UGAME will initially cater to the World of Warcraft, Counterstrike, and Quake obsessive, its motto points to a more ambitious future with “All Games. All Platforms. All People.”

A key to starting a successful niche social network probably lies in the creators’ ability to balance familiar features with ones that capitalize on the niche’s unique qualities. If this is true then the team behind UGAME is off to a good start. They’ve built in lots of functionality that will be immediately familiar: news feeds, profiles, friends, blogs, photo galleries, status updates, etc.

But they’ve also added gaming twists to these features and built out new features that don’t exist elsewhere. To name a few: members can post their gaming achievements from both tournament and non-tournament events; they can list their favorite games and computer hardware specs; and they can join teams that are allotted their own public-facing profiles.

UGAME grants users an unusual amount of control over privacy settings. While all sections of the site are accessible to non-registered users, only elements designated as “public” will show up to everyone. Privately designated elements such as photo galleries and profiles will remain accessible only to friends and other permitted users. Founder Sam Mathews describes UGAME in regards to privacy settings as a cross between Facebook and MySpace.

If the premise behind UGAME sounds familiar, you’ve probably heard of Shawn Fanning’s social networking project Rupture, which has been in closed beta for over a year. Or it may remind you of WeGame, a YouTube for gaming videos that we wrote about last month (and which shares a startlingly similar name and color scheme).

UGAME will open its private beta in a few weeks; you can email this address with a mention of your favorite game to put yourself down on a preferred TC readers list for when that happens.

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If our source is correct, a decision has been made as to the long term use of wow.com. It has been transferred to the AOL Games group and is currently being turned into a – you guessed it – World of Warcraft social network.

That makes a lot of sense, given that the first thing that comes to mind for millions of people when they hear “wow” is the ubiquitous online role playing game. Apart from selling the domain to Blizzard (which owns World of Warcraft), turning it into a World of Warcraft related site is the most obvious way to leverage the random traffic it must receive from people looking for the game. Just don’t think too hard about the fact that World of Warcraft is already a social network…

We don’t have any details yet on the functionality of the site or when it might launch, but we’re digging. In the meantime, there are plenty of social networks surrounding World of Warcraft and other MMOGs – see Rupture, Warcraft Social Network, mmoguildsites, and Guildcafe. For related news, see our coverage of Sparter, which runs a MMOG currency exchange.

As a semi-random aside, click on the image above to see a clip from the Southpark World of Warcraft episode.

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BusinessWeek reported that Fanning, the founder of Napster and Snocap, is in the development stages for a new social networking site called Rupture. The site will have a WoW plugin so that players can network within Rupture directly from the game.

Early blogging on the subject speculated that Rupture might “run afoul of Warcraft’s terms of use.” Fanning’s representative insists that this isn’t the case and that Rupture is “absolutely consistent with World of Warcraft.”

Rupture will reportedly allow social networking from other games in addition to WoW.

We requested an interview with Fanning but he is not taking them until the site launches, which his rep could only say will be in the first half of next year. For now, visitors to the site can request additional information when it becomes available by providing their email, guild, and realm. Fanning told BusinessWeek he raised capital for the site from a group of investors including Ron Conway and Joi Ito.

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