NAPSTER SEEKS FUNDING, CONGRESSIONAL APPROVAL

Napster Inc. is preparing to close on a first round of funding from at least one institutional investor, Hummer Winblad Venture Partners, sources said.

In addition, a think tank said on Friday it will suggest measures to Congress next week to reduce piracy associated with the controversial song-swap company and similar online services.

The Progressive Policy Institute, a Washington, DC-based research organization for the centrist Democratic Leadership Council, will propose the measures in a paper on Tuesday at a House Small Business Committee hearing.

In regards to Napster's upcoming funding feed, Webnoize reports that the year-old, San Mateo, CA, start-up has been negotiating for about four months, with at least a dozen prospective institutional investors, for a first round worth between $16-$20 million.

Interest from investors has been mostly steady, according to sources, despite controversy related to its product, a software application that lets users swap MP3 music files, but could be modified to swap any digital content.

Investor enthusiasm dropped off briefly when Napster was sued by the Recording Industry Association of America last December, which accused the company of contributory copyright infringement. Since then lawsuits have been filed against Napster by rock band Metallica and rapper Dr. Dre.

Hummer Winblad is a respected venture outfit with investments in online music distributor Liquid Audio and online retailer Pets.com.

Napster's web site is among the Web's most popular music-related offering, ranking above MTVi's SonicNet and ARTISTdirect's Ultimate Band List, and just below MP3.com and stalwart MTV.com, according to Media Metrix.