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Future of Fantasy Sports

Postby fantasysportsfan » Wed Mar 16, 2005 8:54 pm

Many of you have heard about the shake down in fantasy baseball with the MLB attempting to control the industry. There have been other posts about this topic but let me summarize the current arguments that are being discussed in the landmark case CDM Distribution & Marketing v. MLB Advanced Media and the onslaught of legal questions that are bound to be circulating.

The case that has been referred to as being the silver bullet for the right to use statistics is: NBA v. Motorola and STATS, Inc.

http://legal.web.aol.com/decisions/dldecen/nbadec.html

I can write 10 pages about this case but here it is in a nutshell.

Prior to March 1996 Motorola, Inc. had a service called SPORTSTRAX that provided real time statistics of NBA games to pagers. STATS, Inc. was the provider of this information. NBA sued for copyright infringement for the publishing of player statistics. At first the NBA won only on the rights to REAL-TIME stats but that decision was later overturned in a federal Appellate court ruling that displaying the raw stats was not a re-representation of the game.

Copyright Infringment or Publicity Rights?

As most already know, CDM Sports has filed a lawsuit against the MLB for the right to use statistics without a license. But I have been amazed that in actuality the case has very little to do with the rights to stats.

MLB has painted themselves into a corner. They KNEW they couldn't win on the rights to raw data. They are very well aware of the case law that exists. From the second the suit was filed the MLB agreed with CDM that statistics are in the public domain. However, it is the Players' Names that violate publicity rights. A bold move to put all of your eggs in one basket. This is quite a little twist because copyrights are protected by federal law while publicity rights are different for each state. We'll see how that plays out.

"It's about the commercial exploitation of players' names or likenesses," said Bob Bowman, MLB Advanced Media chief executive. "It's one thing to say here's the box score from the game; it's another thing to say we've created a separate thing called fantasy baseball. We're no longer reporting the facts; we've now created a game."


MLB figures that it doesn't matter if they win on stats because if they win on player names then the games still can't be played without a license... (or can they).

John Hunt (USA Today) brought up a good point:

Of course, a company might, say, allow customers to fill their rosters not with "Johan Santana" but with "Minnesota 57." Where should the line be drawn, if at all?


Of course every company wants to use the player names but if the CDM case was lost, would you rather have a player reference on your site or pay a licensing fee and a percentage of gross? (remember this applies to the NFL Players Association too which typically takes between 10-15% gross plus a $20k minimum.)

Let's go a step further, shall we? What if a single trusted entity like the Fantasy Sports Trade Association (FSTA) created a master player list of the 4 major sports and their corresponding references? A list of standards that the entire fantasy community could use for free.

Again, this is only assuming CDM loses the case which I don't think will happen. But consider it a Plan B.

We know what the fans want!

Listen, this entire thing is about the greed of MLB. This has nothing to do with the fans. CDM's lawyer, Rudy Telscher said "the MLB already suffers from the image that it's too greedy." He believes it is trying to monopolize the fantasy market. The Internet and fantasy games have revived the baseball industry, and now MLB just wants a bigger piece of the pie.

"Now that [fantasy baseball] has become so popular, MLB looks at the revenue and says, 'We want to exclusively control it,'" Telscher said.

Let's take a look at some of the nonesense that has been spewing out of the MLB Advanced Media (MLBAM).

"All of the [players associations] across the major sports have generally held that the commercial use of player names without a license is an infringement of their rights," Bowman said.


My View: Everyone else is doing it, so that makes it ok. Well hell, the Mafia has been around for over a hundred years. I guess that is ok too.

Bowman says there's only one goal: "We want more fans playing more fantasy baseball."


My View: Let's start by limiting the number of companies, and forcing those who created the darn industry to go out of business, especially one that had 35,000 customers last year.

"We are especially pleased that every fantasy game licensee from last year, with only one exception, will be part of the 2005 fantasy game licensing program," said George Kliavkoff, senior vice president of business development for MLBAM.


My View: Interesting how they suddenly award licenses now that they are being sued, thereby trying to isolate CDM from the rest of the fantasy community. In essence they can now say... "see, all of these other companies don't have a problem with our license."

"To say we need to stay with the status quo is unacceptable," Bowman said. "The core fantasy players, we want them to keep playing, of course. But what else can we do to make this more accessible and more entertaining for a much broader fan base? That's what we're trying to find out."


My View: So you have no clue what the fans want, do you? You just said you are "trying to find out". All you really know is that whatever it is they want, you want your cut.

Bowman believes that what's needed is innovation, such as fantasy games where players get online video highlights and news updates via cell phone about their rosters.
And it's not uncommon for sports leagues to thin out the ranks of its licensees, such as when the NFL let Reebok handle sales for all its game jerseys and Electronic Arts handle its video games. Says Bowman, "It appears that licensors think they can create a bigger business by concentrating licensees."


My View: Let me get this straight...You woke up one morning with the divine vision that what the fans want are video highlights and cell phone updates and instead of just creating those features and finding out if the fans actually do want it, you dictate to the entire industry that they have no choice but to license this crap from you or go out of business. And of course, at first, the licenses weren't even offered. You see, the first deal on the table was, "Give us all of your customers that you've accumulated over the years and we'll give you the privilege of taking a 10% finders fee." So when CDM's lawsuit in essence says, "F**k You, you arrogant a**hole!", you then turn around and award everyone licenses and pretend you were going to do it all along.

"If you're more than 5,000 (customers), we want to have a conversation and understand your marketing commitment," Bowman said. The Sports Business Journal reported that MLB was seeking about $3-million each from its largest fantasy partners in this new agreement. Negociations start at $2 per customerif you want to sell your customer base to them.


My View: --Translation-- If you don't have over 5000 customers, you aren't worth our time and don't deserve to be in business. We will LET you sell your customers to us but we won't let you continue to operate your puny business.

You're right Bowman... it's not about the money... it's all about the fans.

Jim Gallagher, senior vice president, corporate communications for MLB Advance Media, said that baseball officials are not claiming exclusive rights to player statistics. But if a company is trying to use those statistics as a means of financial gain, he said, then MLB has a legal right to demand a license for their use.

"Player statistics are in the public domain. We've never disputed that," Gallagher said. "But if you're going to use statistics in a game for profit, you need a license from us to do that. We own those statistics when they're used for commercial gain."


My View: OH MY GOD, SOMEONE TACKLE THIS GUY!
This is the Senior Vice President and doesn't know what the heck he is saying. First he says that player statistics are in the public domain. BUT, if you are making money THEN "we own those statistics". Are you f**king kidding me? If that is not the most backwards load of garbage I've ever heard. So, if you're making money, they own the stats. If you're not, they are public domain.

If I were the MLBAM lawyers, I'd be begging these guys not to say ANYTHING!

OK, I've gone on enough. It is making me sick, so let's get to the actual legal issues here.

As reported by Tresa Baldas of The National Law Journal:


Intellectual Property litigator Kent Goss, who represents athletes with regard to their rights of publicity, believes that MLB will have a tough time convincing a court that player statistics warrant copyright protection. He said that the test will be weighing MLB's copyrights and the publicity rights of players against what the public wants.

"The public is fascinated with sports, and in particular baseball. Essentially, they can't get enough of stats," Goss said. "I think the courts are going to want to protect the fans' rights to use the stuff."

Goss, a partner in Pillsbury Winthrop's Los Angeles office, cited a 2001 case in which the California Court of Appeal upheld Major League Baseball's right to use historical players' names and statistics. A group of former players sued MLB for printing their names and stats in game programs, claiming their rights to publicity were violated. But the court held that they were historical facts, part of baseball history, and MLB had a right to use them. Gionfriddo v. Major League Baseball, 94 Cal. App. 4th 400 (2001).


So, the Players even sued MLB for the use of their names and stats and the MLB won since it was historical data. Now CDM is claiming the SAME thing. How much more ironic can it get?

THREE FINAL ARGUMENTS

If the MLB loses on the rights to stats AND loses on the use of player names violating publicity rights, they can still argue three more positions.

1) They can claim that the methods of compiling stats are copyrightable. I can't see this holding up in court because there are several companies that compile stats (Sportsticker, STATS Inc., TQ Stats, and XML Team just to name a few). Even if you need to pay those companies to get the stats, it has nothing to do with an MLBAM license.

2) It isn't the fact that a player name is used to reference a statistic. That is generally considered "fair use" and the MLB has already said that they have no issue with it. But they could argue that it is the cumulative list of player names that makes the fantasy game possible. Their argument could be that without the player names, there can be no game and therefore their "property" is the determining factor in a fantasy company's ability to produce a commercial gain. Basically, they may believe that the games could not work without the player names and therefore they are not merely suplemental "information or news" but rather an integral piece to the success of the contest and its ability to generate revenue.

Though this is a better argument, I can't see this holding up either. You see, it isn't because of the player names that people play fantasy sports. The competition, the challenge, the bragging rights, and the prizes are the reasons why people play. AND it isn't the player names that create the game either. The interface, the rules, the scoring, and even the presentation and technological process is what "MAKES" the fantasy game. And THAT, the MLB has no right to. It takes a creative effort for each company to produce the end product that the users interact with.

3)What about endorsement? MLB could claim that the list of player names is an implied endorsement of the players. This of course is ridiculous but they can argue the point nonetheless. All it would take is for every company to make every customer agree to a "non endorsement" clause. Heck, users already agree to the Terms of Use and Privacy Policy.

It would be easy to simply have them click a box saying:

"I agree that [company name] is not endorsed by the MLB, any individual player, the MLB Players Association, MLB Advanced Media, or any MLB Team. I further understand that a list of player names for the purpose of creating a roster DOES NOT imply endorsement from any of the aforementioned."


That solves that one. Takes any possible confusion out of it.

I have two more little provoking thoughts:

First, when a Las Vegas casino makes a betting line on a fight or game they often use player names. Does that somehow imply endorsement to the casino? Are publicity rights of players or copyrights of those sports organizations being violated? Is it not being used for "commercial gain"? Yet those casinos don't pay a dime. Please explain that one to me MLB.

And let us not even get into the fact that newspapers have been displaying stats, pictures (or player likenesses), and player names for decades. Most argue that news outlets are protected by free speach. True, but is it not also being used for "commercial gain"? Would they sell the exact number of copies if there were no box scores?

Second, why is it that in the NFL Players Association group licensing agreement, it states that any company with 6 or more players is a violation of publicity rights and therefore must be licensed. Ok, so 5 players means no violation but 6 players means you owe them thousands of dollars. What kind of moronic b*llsh*t is that? That isn't how the law works. It seems that these giant companies have simply dictated their own RULES that have no backing in law. Just because you SAY something doesn't mean it is legal. EVEN if the players agree to it doesn't mean it's legal. There is either copyright infringement or there isn't. You can't say that 5 players is ok but 6 means you're screwed. Why 6? Why not 4? Why not 50?

What the MLBAM and the NFLPA don't realize is that they are going to make their money from the big 3 companies (Yahoo, ESPN, and Sportsline) REGARDLESS. THERE IS VALUE in being the "officially licensed" game of the MLB. The CDM case will have little or no bearing on the licensing agreement of those companies. They are going to pay to be endorsed!

If they were even half as smart as the common tree stump, they would pour millions into out-marketing everyone else. They could easily buy up every ad in every fantasy football magazine. They could dump a few hundred thousand in Pay Per Click campaigns and banner ads across the Internet. They could launch radio campaigns, newspaper ads, and billboards. All of it together wouldn't be more than 1-2 million. FANTASY SPORTS IS A BILLION DOLLAR INDUSTRY PEOPLE!!! On top of that, they could get the players endorsing their games saying:

"If you aren't playing an officially licensed game, then you aren't playing fantasy baseball."

or

"MLB.com, the ONLY place that the players endorse."

or have Peyton Manning say,

"When my friends and family play fantasy football, they only play games licensed by the NFLPA."

The idiots don't need to force licensing or limit competition to win in this industry. It is amazing that with all of the money they have and important people they hire, they fail in the most fundamental marketing and business concepts.

Sincerely,

Devoted Fantasy Football Fan
Last edited by fantasysportsfan on Wed Mar 16, 2005 10:23 pm, edited 4 times in total.
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Postby deluxe_247 » Wed Mar 16, 2005 9:27 pm

man...1 post and its probably the longest one ive ever seen :-o :-o
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Postby gatorman1122 » Wed Mar 16, 2005 9:51 pm

hold on... let me get back to you in about 3 months with my thoughts :-?
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Postby Horizons » Wed Mar 16, 2005 10:08 pm

Great post......I think :*)
Don't give up the ship...........sell it!!
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Postby awwchrist » Thu Mar 17, 2005 1:32 am

Great post. Please tell me you formatted that in another application. Our text input screen is way too confined for that. ;-)

One point I'll make:

it isn't because of the player names that people play fantasy sports. The competition, the challenge, the bragging rights, and the prizes are the reasons why people play.


I think it's a valid argument that people play because of certain professional players. People want to affiliate their fandom through more and more outlets asides from buying a jersey to wear or a poster to put on a wall.

They'll create accounts and pay money to play fantasy football, where they now have a surreal ownership of their favorite player. If you were a Barry Sanders fan, would you not want to try fantasy football and see what it would be like to be the only guy in your league to have him? Another feather in your cap of being a fan.

How many times a season do you see on this message board "When it comes down to it, I'll draft X player over Y player because I'd rather root for him". That's a corralation of people paying and playing this game because of name recognition, and not of competition.

Don't get me wrong, I've hated MLB with a passion for more than a handful of years now. Pretty much since Bud Selig has been in office, what's that...over a decade now? The notion that statistics, or simple measurements, when combined with the last name of the player, suddenly becomes a licensed biproduct is appauling.

It's fair use content and should be considered as such.

Wow...how much of a cash cow is fantasy sports? Things are a-changing.
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Postby UNDEFEATED » Thu Mar 17, 2005 2:15 am

AWESOME POST. I love stuff like this.

Did you guys know that Fantasy Football is a BILLION dollar industry. And that was in the early middle part of the football season. Not to mention all the other sports.

THIS IS GOING TO BE A MULTI-BILLION DOLLAR INDUSTRY.
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Postby Santacruzer » Thu Mar 17, 2005 3:32 am

Wow, does my first post have to be like that?

Hello guys :-)

Excellent post and good points. I was never much of a Baseball fan, and stuff like that pretty much cements that in my head. The NFL was slow to get on board with FF because they didn't want to associate themselves with gambling. Once they understood it a little bit better ($$$), they hopped on it and are promoting it as much as they can (Fantasy stats on the bottom of the screens, discussions pertaining to FF, and even the FOX and CBS pregame crews playing and handing out trophies to themselves). I don't know if Baseball is doing this, I can't stand to watch a game :-D .

I think I remember something coming up last year about the NFLPA wanting to charge that 10 - 15% for the player likness', but I don't remember hearing about it since.

I really would hope that the NFL would not come to that conclussion, and would let fans become MORE of a fan, and bring others into it, before they charge us to the hilt.
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Postby LBJackal » Thu Mar 17, 2005 4:48 am

That is the longest post ever that started with the words, "here it is in a nutshell".

But good stuff... I read it all, surprisingly. As long as fantasy baseball is still free, and still available from good services like Yahoo, I'll be happy. I don't want videos of my players, I don't want cell phone updates... what they offer now is more than enough. I really hope MLBAM is determined to have NO rights to say who can and can't use stats and player names. That'd make it $50M well spent, wouldn't it? Greedy bastards. Hell I wouldn't even care if we had to use loophole names like the Lahman Database uses (ie: Carlos Beltran = beltrca01) or something like that.
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Postby JohnnyUnitas » Thu Mar 17, 2005 5:21 am

Took me 2 days to get through it, but yes, good post. ;-)
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Postby Mercer Boy » Thu Mar 17, 2005 9:30 am

I read it all, great points in there. I think every die-hard fantasy player feels the same way. The MLBAM is just trying to determine ways to make more money, and just like the media, they want to dictate what the "news" is (having video feeds, etc.). They also want to get more market share and figure since they wear the pants they can fit them as tight or loose as they want them to be (especially in the crotch 8-o ).

I would venture to say about 90% of fantasy players are not super-insane stat geeks like us (admit it, guys :-/ ). That would be the only crowd MLBAM would be catering to since we are the only ones that crave different league structures and scoring systems that more closely mimic the real game.

I'd venture to say the normal everyday fantasy players are just playing to be in competition among friends, get bragging rights, and have stuff to talk about during games and normal conversation. They don't want video feeds. The only reason to use the pay services are to get more functionality (live scoring, keeper/dynasty capability, salary caps).

That being said, what is with all the advertising for ringtones on MTV? I swear, every other commercial in there is telling you to get the latest 50 Cent ringtone...how much money is being wasted on getting a new thing for your phone that you will only use for like a week until the next "big" song and ringtone is out. God, people are sheep. :-[
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