Loudeye Buys Anti-Piracy Firm

Overpeer Inc. specializes in 'spoofing.'

Seattle-based digital-music service provider Loudeye Corp. has acquired spoofing specialist Overpeer Inc. in a stock swap valued at $4 million.

Under terms of the agreement, Loudeye acquired 100% of the stock of New York-based Overpeer for approximately 1.7 million shares of Loudeye common stock.

Loudeye, which provides online retailers with music services including downloads and streaming radio, plans to market Overpeer's anti-piracy technology as a way to track music being swapped on peer-to-peer networks, block file-swapping and promote legitimate content.

Overpeer is a leader in distributing decoy files over P2P services, a practice commonly known as spoofing. Labels are increasingly populating P2P networks with such phony files in attempt to stymie unauthorized downloading of music content.

Loudeye says that over 25 billion Overpeer files were downloaded in January.

Loudeye shares rose 2.3% today (March 2) on the news, closing at $2.40.