Venture Capitalist Seeks MP3 Stake

Sequoia Capital is angling to become a partner in MP3.com, the controversial music Web site launched last year by San Diego entrepreneur Michael Robertson, sources said.

Under a deal that could close as early as today, the Silicon Valley venture-capital firm--which has helped fund such high-tech winners as Yahoo Inc., Apple Computer Corp. and Oracle Corp.--would invest $11 million to become a minority owner in MP3.com, sources said.

In less than a year, MP3.com has become one of the Internet’s leading music sites by spreading the gospel of MP3 technology--a new compression formula that allows computer users to quickly download free CD-quality songs from the Internet. In many cases at other sites, the technology is used to make pirate copies of copyrighted works, provoking anxiety in the $40-billion global music business.

Robertson’s site posts no illegal files, but does offer visitors tips on how to circumvent digital music security systems, connect to search engines that lead to pirated music and download free software that enables them to play legal or bootleg MP3 music files on their home computers. The site also allows visitors to sample and purchase new recordings by more than 400 artists signed to his Digital Automatic Music label.