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We are sitting in a large, noisy cafe in Smithfield in London with background music playing over the loudspeaker. Chris Barton switches on a portable CD player with its own tiny speakers and a record starts playing in competition with the cafe's own music.
I dial a number on an ordinary mobile phone. There is a pause of 10 to 15 seconds, then a voice on the phone tells me it is the Cranberries' Ode to My Family. A short while later, a text message arrives confirming it.

I'm impressed but not convinced. I ask him to put on the Radiohead CD - and the phone correctly comes up with The Bends followed by another text message. Later, I ask him to switch off his CD player and get the phone to identify the background music in the cafe. After a couple of failures (because the songs were not yet on his fast-growing database), it succeeds again (Finally by Kings of Tomorrow). By now I'm no longer impressed. I'm wishing I owned the company.

Chris Barton, a 32-year-old American, is founder and chief executive of Shazam, a London-registered company that is launching its service in the summer at 50p a call.

When he first thought of the idea of getting mobiles to recognise music - it happened three years ago as he was falling asleep one night in London while studying at the London Business School - everyone told him it was impossible. But he persevered and eventually found the right person to do it: Avery Wang, who has four degrees from Stanford University and is his chief scientist, is responsible for the key algorithm.

After listening for 15 seconds through a mobile phone, his software can create a unique mathematical description of the song that can be checked against Shazam's database. It will not only know that it is the Rolling Stones playing Satisfaction, but will know which version it was and which year it was recorded. It contains 300,000 songs - not yet enough to pick up some of the funkier songs in the cafe.

But by August, Mr Barton hopes to have 1.6m songs and he will carry on building up the database. He is archiving the most popular ones first.
His idea has come at the right moment, when mobile phone operators are turning their attention from selling phones to a saturated market to earning income from existing phones to pay for their £22.5bn investment in 3G licences. Since they will probably get nearly 50% of every 50p call made for this service on their existing networks without having to do anything in return, they are naturally keen to promote it.

Shazam is also working out deals with the record companies over royalties to artists so as to avoid the kind of confrontation that zapped Napster, the service that enabled computer users around the world to share music files behind the backs of the record companies.

It is a sign of backers' faith in the product that he managed to raise $7.5m in venture capital during the past couple of years while dotcom companies were collapsing around him. The main investors are IDG Ventures, Lynx New Media Ventures and FLV Fund. One of the first individual investors was Sir Colin Southgate, former executive chairman of EMI, who made a personal investment in Shazam after a 45-minute demo of an earlier version.

It is the most impressive new application for a mobile phone I have come across. But dazzling technology doesn't guarantee success. The worry must be that customers will use it two or three times and then the novelty will wear off.

Chris Barton believes there will be continuing demand. He believes he has found "the missing piece" - when people are influenced by a piece of music but can't do anything about it at the time. Now they can. He points to the increasing number of requests that DJs and radio stations get for details of music that have been heard in snatches.

There are also lots of possible spin-offs for the technology - like performing rights organisations being able to tell exactly what records are being played on the radio or at concerts to check up on royalty payments. And that includes cafes in Smithfield