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Start-up Yaga plans Web payment service

The peer-to-peer distributor acquires online payment company MagnaCash and will give consumers a safe way to purchase digital content over the Web.

Yaga, a start-up that provides peer-to-peer distribution, said Wednesday that it has acquired online payment company MagnaCash and will give consumers and merchants a safe way to transfer money over the Web.

The financial terms of the deal were not disclosed.

The Foster City, Calif.-based company said that with MagnaCash, it will let consumers process transactions safely and anonymously when they access digital content such as audio, video, software and music over the Web. MagnaCash can track and disperse money to the people who deserve to be paid royalties based on the usage of their products.

The acquisition comes as content delivery start-ups take advantage of peer-to-peer technology, building on ideas made popular by online music distribution service Napster. Companies including Radiance, Kontiki, Blue Falcon, Open Cola, Peer Genius, Emikolo and Red Swoosh are betting that peer-to-peer technology will help speed the dissemination of large files over the Web.

Yaga, for one, aims to use peer-to-peer technology to cut the bandwidth costs for the delivery of files such as movies, music, software and e-books. For instance, if a search for a given file turns up several hosts on the network, Yaga's technology will find the five closest sources and simultaneously download the content from them. Once the data has been retrieved, the technology then stitches the file together.

Yaga said Wednesday's acquisition gives it a way to simplify payment for content retrieved over a peer-to-peer network. Transactions, according to Yaga, are authenticated through MagnaCash via user ID, password and digital certificate. The money is then transferred to the content owner from a consumer's credit card or bank account. Customers will have a choice of pay-per-view and subscription options.

"We've been playing with a jigsaw puzzle here at Yaga for the last year," said Chris Kitze, chief executive of Yaga. "This is that last piece of the jigsaw puzzle, and when you can start collecting money and paying people money and tracking all this, it now makes possible what we think is going to be an amazing business."

Yaga said MagnaCash will retain its identity and become a wholly owned subsidiary of Yaga.