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Postby Sixxgunn » Thu Mar 17, 2005 10:19 am

That was interesting...what I read of it.What it boils down to,is if they win,we pay....more,correct?This reminds me of the crappy Cubs and their blocking of the time honored tradition of rooftop viewing,just because they weren't making any money on it.I now refuse to ever pay for another seat at Wrigley Field.Makes me sick,and makes me almost want to go back to pen and paper,and not pay a dime into this thing out of spite.I know it would be too hard to ask,but if the bad guys win this argument,we should pull our money out of it and teach them a lesson in being too greedy. :-P
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Postby madmike » Sat Mar 19, 2005 7:31 pm

Impressive post. Maybe MLB should worry a little more about their image of players on steroids and testifying in front of Congress instead of trying to control fantasy stats.
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FUTURE OF FANTASY SPORTS - the saga continues...

Postby fantasysportsfan » Sat Mar 19, 2005 10:04 pm

FUTURE OF FANTASY SPORTS - the saga continues...

The ever so anticipated Fantasy Sports Trade Association (FSTA) meeting was a few days ago. One of the main topics (in fact almost the only topic) was this licensing issue. This is no surprise because for good or bad this issue will have the second greatest impact this industry has ever seen. (The first being the invention of the Internet.)

I think there were about 150 fantasy companies that showed up. Basically the who's who of the fantasy world. The buzz in the room was about the CDM lawsuit and what the future holds for fantasy sports. As CDM co-founder and VP Charlie Wiegert addressed the audience, he seemed to warn that CDM may be looking to settle out of court. Though this was extremely disappointing because the fantasy community has seen CDM as its knight in shining armor that will save us all, I can certainly understand Charlie's decision. He has to look out for the interests of his company.

You see, it could take 15-18 months before it even gets in front of a judge. This is because there will be a HUGE discovery process that will cost thousands of dollars on both sides. THIS IS HOW BIG COMPANIES WIN. They simply out-spend you. Meanwhile MLBAM is collecting evidence with every company they license. The longer they wait, the longer they have to build a history of licensing and a "value" for their product.

An Intellectual Property lawyer, Bill Heberer, cited a number of cases that backed each side of the argument. In typical lawyer talk he protected himself and failed to take a definitive stance on anything. It was more like "This case defends the MLB argument, and this case over here defends your argument." Though I can't blame him totally because it is a complex issue, what bothers me is that people still don't get what we are trying to defend.

My View: Bill, every single case you cited that could possibly defend the MLBAM's position had to do with the player "likeness" (like a cartoon of a baseball player in an advertisement) or misrepresenting trademarked material (like a jersey with the Packers colors that says GBP on it). We aren't talking about advertisements or trademarked material, we are talking about the "fair use" of player names in forming rosters, in which NO endorsement is either expressed or implied.

Now I have to give him credit for realizing that this is not a copyright issue. It is a publicity right issue.

Stats are not even part of the equation right now. There really is no defense they can use. Even taking the angle that a "compilation" of stats creates an original work of authorship worthy of copyright protection can not hold up. In Feist Publications, Inc. v. Rural Telephone Service Co., Inc. not only did the court rejected the "sweat of the brow" position but also went on to consider the question of whether a factual compilation was worthy of protection at all, deciding that originality equates an independent creation, not simply copying other works and compiling them into a database.

No, this isn't about stats anymore, this is about publicity rights. The argument now tears and the core of all fantasy games.

So, let me clear up this whole Right of Publicity thing once and for all. Sit back and enjoy the show.

As I have stated before, the Right of Publicity is different for each state, which makes defending such a right on a national scale very difficult. While in some states the right of publicity is only applicable to a celebrity or public personality there are other states where the right of publicity applies to any individual. However, in a number of states the individual's right of publicity is only protected when the misappropriation of the individual's identity has publicity value - meaning that the individual has previously commercially exploited his/her identity. So in some states, you can make money off of someone's name or image if the person has never made money off of it themselves. In essence, it had no value and you created the value (though depending on the case you may still be in violation of their right of privacy).

But fantasy games do not apply to those issues I stated above. Obviously professional sports players ARE public personalities AND have made money from their name before. Our argument is different. It is based on the "fair use" of public knowledge. We'll get to that.

So, though some of these states differ on the "general" use of publicity rights there are common definitions and beliefs that hold true for virtually all states (I've checked 39 states so far).
    Definition: "One who appropriates the commercial value of a person's identity by using without consent the person's name, likeness, or other indicia of identity for purposes of trade is subject to liability for the relief appropriate." This definition in some form is virtually standard across every state.
    Right of Publicity v. Right of Privacy: "The elements of appropriation of invasion of privacy are the same as for violation of the right of publicity with one exception. The invasion of the right of privacy is a personal tort and it generally may not be assigned or inherited. Whereas, the right of publicity, a property right, may generally be assigned and inherited." So, your right of publicity is a form of property that can be sold, transferred, or inherited.
    Permitted Uses: Situations in which use is permitted include the reporting of newsworthy events and uses in which no person is identified or identifiable. Courts generally hold the reporting of newsworthy events to be allowed under the First Amendment which forbids any laws "abridging the freedom of speech or of the press." This is why the reporting of STATISTICS is not an issue. They are historical and newsworthy events.

    But the MLBAM and the NFLPA are not claiming that you need to be licensed to report stats, EVEN if you have a player name with the stat. (though that is exactly what they have claimed in years past).

Their NEW argument is that using player names in the function of the fantasy game itself is a violation. You aren't reporting facts, you are using their name as a "PART" of the product. This whole thing is all about the ROSTERS! They make no distinction between a fantasy game and a shirt with a name on it that is being sold. They just see the "NAME" as being part of the product.

First Amendment Protection

The First Amendment permits a publisher to use an individual's name or photograph on a book or magazine cover when the book is about the individual or the magazine contains an article on the individual but the name or photograph should be used in a way that accurately represents the content of the publication. When an individual is the subject of a biography or news article it is permissible to use that individual's name and/or likeness in advertising and promoting the publication. A publisher may also use the name and photograph of any persons whose ideas are discussed in a publication in promoting the publication.
This is why fantasy magazines are protected.

The law attempts to strike a balance between an individual's right of publicity and free speech rights to permit specific uses of an individual's identity. One serious difficulty with relying upon First Amendment protection is the legal unpredictability of First Amendment rules. The First Amendment provides a hierarchy of protection under the newsworthiness exception depending upon how the individual's identity is being used. The greatest protection is provided for news (as I stated above), lesser protection is provided for entertainment and fiction and the least protection is available for advertising uses where a portrayal of a real person's identity is used to sell a product or service.

MLB will claim that fantasy games fall somewhere between the second and third area. Though the games are used for entertainment, the MLBAM and NFLPA can argue that it is used to sell a product or service or is even part of the product or service.

But is that entirely true?

Most publicity law states that a name or likeness can't be used to advertise a product where the person is expressing or implying an ENDORSEMENT. I believe that the vast majority of fantasy football companies do not use player names in their advertisements so we can slice that part of law away. Because we aren't talking about news either, we can slice that part away.

The key is to get to the core of the argument.

There are two Million Dollar Questions that the MLBAM and NFLPA will ask:
    1) Can a fantasy game exist without a player name?
    2) If the answer is YES above, then does the game hold the same value without player names? Meaning, does having player names increase the value of the product?
If you can prove that the game could exist regardless (like using player references) AND that approximately just as many people would play without player names, then their argument is defeated.

This is not to say that we don't have other avenues to pursue.

OUR FINAL ARGUEMENT

We can still bring up the fact that though the player names might be essential to the functionality and playability of the fantasy game, it ONLY requires the names as historical data. (like making a fantasy game about the weather where you had to accurately predict the temperature in various cities. It is historical and public information that is being used.) This is A LOT different than selling a jersey in the Colts colors with "MANNING" on the back. In that case, his name is what creates the value for the shirt. There is an implied endorsement of the product. I believe we can VERY SUCCESSFULLY argue that there is no endorsement expressed or implied by the players on fantasy rosters.

    LET ME BOIL IT DOWN FURTHER!
    It isn't the fact that player names are needed, but rather the fact that WHICH player names we use is irrelevant. So, if Peyton Manning stopped playing football would the game lose value? NO. People retire all of the time, or get injured and are out for the entire season. The game would continue and would retain the same value because it is the cumulative list, and not any individual player that makes the game work. So, the fact that we are using a cumulative list of public information that is ever changing year after year (and sometimes even day after day), CAN NOT violate publicity rights because any specific name or player does not give the game value like it would in selling a picture or jersey of a player.


If you can argue that, you win. I know, easier said than done, but at least you now know EXACTLY what it is we are trying to get a judgment on.

BACK TO THE FSTA MEETING

Knowing that CDM may settle this case, president Greg Ambrosius asked the members if they would like the FSTA to pick up the ball and get a declaratory judgment. There was an overwhelming confirmation and a committee to will be formed (headed by board member James Serra) to plan out the next steps to take.

Though I applaud the FSTA for taking a firm stance on this injustice, I just hope that instead of getting the declaratory judgment that the industry needs, the committee doesn't decide to negotiate a long term "deal".

I believe that most of the FSTA members don't want to pay ANYTHING if they legally do not have to. Even a 2% deal for 30 years is not what the membership wants, unless it is proven in court that they MUST be licensed. Plus, if a "deal" is made with the MLB you would still need to do the same for the NFLPA. As I'm about to explain, that will never happen.

THE NFLPA: "Most of you will go under anyway."

On day 2 of the FSTA meeting, LaShun Lawson from the NFLPA made an appearance. Let me just say that the Devil himself prays at night not to meet up with this woman. Harsh words... I know. But they are completely justified and I am surprised that the FSTA members didn't rush the stage and slay her.

She so eloquently explained that in many major industries there is a natural consolidation in which only a few companies can survive and all others go out of business. She went on to articulate how the majority of the people in that room would be out of business in a year and therefore aren't worth her time.

Now, Greg (being the level headed and logical leader he is) spoke up saying "LaShun, if you were to lower your licensing fees to $10k, I know there are at least 50 companies here that would get licensed without question. That is half a million dollars. Is the NFLPA prepared to do that?"

LaShun's response? "We aren't prepared to handle that many licenses."

ARE YOU KIDDING ME? If you had 50 companies ready to give you $10k, wouldn't you HIRE more staff? What is really involved with managing a license anyway? You pay someone 30k per year to sit there 8 hours a day looking at a spreadsheet with 50 names on it. Every few days the person picks up the phone just to call one of them and see how they are doing.

This lady is the epitome of big business arrogance. She actually told the people that they had no shot at being successful. Some people raised their hand and told her that they've been in business for 10 years and have been stable and slowly growing every year.

I personally think that she loves the controversy. She likes the position of power and being able to say "we will give you the privilege of paying us for a license and staying in business. Oh, but you over there.... you will have to shut down because I don't think you will make it anyway." Ultimately, I think the NFLPA is waiting to see if they can get an exclusive MEGA deal from a major company for 2006. That is why they have only offered 1 year extentions to their 12 licensees. I'm sure they also want to see what happens with this CDM lawsuit.

This is why I must reaffirm that we need to strip the NFLPA of this power. There is no negotiating with them, Greg proved that. Let's get this settled once and for all.

Sincerely,
Devoted Fantasy Football Fan
Last edited by fantasysportsfan on Sat Mar 19, 2005 11:51 pm, edited 1 time in total.
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Postby The Miner Part 2 » Sat Mar 19, 2005 10:09 pm

O:-) dude...youre not human.
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Postby Manja » Sat Mar 19, 2005 11:29 pm

A very good read.. And now I need to go lie down before I pass out.
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Postby ravage » Sat Mar 19, 2005 11:43 pm

fantasysportsfan, I understand your position and I agree, at least with what I understand. The big question is what can we, as fantasy owners, do about it? Are we just locked on the outside?

I've got to say I'd go back to paper and pencil before I'd go for some of this stuff especially at what I would expect the prices to be. But face it, we'd go on. The companies may not be there any longer but we'd make our own web page and go on. More work, sure but we'll go on either way.
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Postby Azrael » Sat Mar 19, 2005 11:59 pm

It seems they want to control companies that charge for fantasy sports...but as long as there are databases that let you play freely (like Yahoo), can they do anything?

I think fantasy football is still in it's baby stages. I can see it getting alot bigger with the next generation. I started playing in my early 20's (about 6 years ago). I think if it had been more prominent, I'd have been playing it as a pre-teen. I think the industry will explode in the next 5-10 years. Fantasy sports shows will become mainstream in that timespan as well I think. I've seen very little books on fantasy sports. I think you'll start to see alot more as well. I can see it getting as popular as poker is nowadays.
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Postby Mercer Boy » Sun Mar 20, 2005 12:49 am

Azrael wrote:It seems they want to control companies that charge for fantasy sports...but as long as there are databases that let you play freely (like Yahoo), can they do anything?

I think fantasy football is still in it's baby stages. I can see it getting alot bigger with the next generation. I started playing in my early 20's (about 6 years ago). I think if it had been more prominent, I'd have been playing it as a pre-teen. I think the industry will explode in the next 5-10 years. Fantasy sports shows will become mainstream in that timespan as well I think. I've seen very little books on fantasy sports. I think you'll start to see alot more as well. I can see it getting as popular as poker is nowadays.


No doubt this will be the case. Pre-game shows are already showing fantasy stats at the bottom of the screen and having fantasy experts come in and talk about that week's games. ESPNEWS has a fantasy guy talk just about every day as well. It's only a matter of time before ESPN realizes that they just need to have a half-hour show every day that just focuses on fantasy sports. It doesn't just have to be one sport, it could be all sports. I bet it would get just as much of an audience as some of their other shows if not more. The die-hard fantasy geeks like us would be sheep for it to tend, and it would get flocks of people a month or so before the baseball or football season starts.

Heck, I wouldn't put it past them to do a reality show on some guy playing fantasy baseball or football to see how he's doing throughout the year and what type of commitment it takes to play the games well (I want royalties on this idea WHEN it happens. :-[ )

I don't really care much about all the stuff that was written above. If they're going to try to corner the market and be greedy jerks about fantasy and make everyone pay 50 bucks just to have a league, I'll stop playing. I'll do leagues through the Cafe and figure out points myself before I do that.
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Postby UNDEFEATED » Sun Mar 20, 2005 4:05 am

These must be the GREATEST TWO Consecutive posts EVER. And the best First and Second post by a member. Exception being the First post ever in the cafe. "The Birth"

I think he should get more credit than two. Kinda seems unfair.

THanks for sharing the info. ;-D ;-D ;-D ;-D
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FUTURE OF FANTASY FOOTBALL - to fight or not to fight

Postby fantasysportsfan » Sun Mar 20, 2005 7:27 pm

FUTURE OF FANTASY FOOTBALL – to fight or not to fight

I can't even believe this is the question. There seem to be a couple of people who think that if we do nothing, this issue will go away. Mistakenly, some people are comparing the current threat with those of years past. At the meeting, there were even a couple people saying "I've operated for years and they haven’t shut me down. Why should I worry now?"

Ok, since you asked, I'll tell you.

I don't think anyone can argue that the industry of today is different than the industry 8 years ago... heck, even 3 years ago. It is getting bigger every year. It would be foolish to believe that the MLB (or the NFLPA) is on an altruistic crusade to defend the rights of their players. They couldn't care less about the players' rights, other than the fact that those rights seem to be worth a LOT of money. Proof? Would either organization be defending these licenses if only 10,000 people played fantasy sports every year? Of course not.

All of this talk from Bob Bowman about wanting to give more options to the fans is just smoke. For the MLBAM this is about protecting their investment. Think about it from a business decision. They signed a 5 year, $50 million deal for these rights. So, just to break even, they need to make $10 million per year. That is not even including operating expenses (I'm sure Bob Bowman isn't getting paid in free fantasy games). There is no way they can make up that kind of money from all of these little companies. It's a fact so just accept it. They are trying to get 3 million each from Yahoo, ESPN, and CBS Sportsline. That is $9 million, right there. The additional revenue generated from MLB.com would push it to profitability.

CAN'T YOU JUST LEAVE ME ALONE?

So the next logical question is "well if they sign these big guys and made their money, why can't they just leave us alone? We aren't a threat." Because, if they don't defend and enforce the rights that they are selling licenses for, suddenly the licenses aren't as valuable or worse yet valueless. This entire thing is about keeping those big 3 companies happy (and paying).

Now, what if you were ESPN? If you were paying millions of dollars for licenses wouldn't you be a little upset if a bunch of other companies didn't have to pay at all, or had to pay only a fraction of the price? Part of the value is the "you're the only one" pitch that they can give to these big companies. It is semi-exclusive.

IT DOESN'T AFFECT US...

The most ironic part of this is that two of the 3 big companies have representatives on the Board of Directors for the FSTA. The ideal situation is if ESPN and CBS Sportsline said, "3 million dollars! You are out of your mind." then joined the fight. MLBAM would have no chance at success. One could argue that besides the great PR these two giant companies would get for saving the industry for the fans there could also be a financial incentive. $6 million between two companies can fight one heck of a battle. Even one of them could probably win it. And winning would mean that $3 million would instantly drop to their bottom line each year thereafter (not even including the money they would save from not having to pay the NFLPA either).

But there is another side to this story. Is it worth 3 million per year to put your competitors out of business; to be the only one left standing? It might be.

As far as the FSTA goes, at what point does personal interest end and the obligation as an FSTA board member begin? Am I the only one that sees a conflict of interest here? There is no doubt that everyone on the board is a good guy. They are all smart people that love this industry. But I want to know if the board is going to represent themselves or the hundreds of members who paid to join this association.

DOES THEIR GREED STOP HERE?

The MLB is pricing everyone out of the market. For fewer than 5000 customers you can sell them your customers or maybe they will give you a restricted license for about $10k. However, if you have 5001 customers, the price starts at $500,000. If that isn't a way to protect your golden egg, I don't know what is. It makes it impossible to grow. You either have 5000 customers or have 250,000 customers to afford the price hike. There is no middle ground.

And what people don't realize is that by agreeing to a license (no matter what the deal is) you are agreeing that they have a right to sell the license. You are handing over control of the industry. Sometimes it seems that people can't see more than two feet in front of their face. They are only worried about 2005. What happens if MLB comes back next year or the year after and says, for less than 5000 customers, the license will be $50,000 ($10 per customer)?

Company: "But that isn't fair, I can't stay in business at that price."
MLBAM: "Sorry, that's the price. You have to license or sell your customers to us."

Then are you going to sue them... alone? Any argument that they never had the right to license in the first place is somewhat tainted isn't it, especially after you have already paid for a license in the past?

Even the big companies face the same problem. Why is everyone so convinced that their greed is maxed out at $3 million? What happens when they want $6 million or more? What is the threshold that finally tips the big 3 over the edge?

NFLPA IS GREEN WITH ENVY

If you think the NFLPA isn't looking at this $50 million dollar deal with eyes of envy, you are kidding yourself. They want to cash in too and believe me, they plan to. Another FSTA member made a great point about the meeting with LaShun. As we sat there (or stood there pacing around with fury) listening to this woman make up stories as to why the NFLPA would not give the companies who created the industry the ability to license there were 3 main questions that were running through people's mind.
    1) Why wouldn't they want our money, it is half a million dollars?
    2) For years many companies have continued to grow so why now would they think that we would go out of business?
    3) If I take this chair and smash her over the head with it, I wonder if anyone would notice.


OK, the third one might have just been me (though I doubt it). But here is the point, $500,000 for managing 50 contracts is NOTHING compared to the money they can get with just 1 or 2 semi-exclusive deals.

It isn't that they think you will go out of business; it is that they want to PUT you out of business so they can charge a fortune to the selected few!

Do people actually think they aren't planning this? The writing is on the wall. They have come right out and said that a consolidation is eminent. She brushed off an attempt from Greg for a very fair compromise. There wasn't even a "lets talk about it" or an "I'm sure we can work something out." This isn't a "maybe" people. We are the only thing left that stands in their way.

A THROWBACK TO THE OLD DAYS

Some people have said that, "I'll go back to using paper and pencil. There is no way I'll let them win." Listen, your heart is in the right place but you haven't been listening to what I'm saying. Besides it being economically impossible if you have thousands of users, your defense isn't somehow bolstered or justified if the game suddenly wasn't online. In fact, you may actually be MORE at risk because in order for people to play offline, you would have to print out the roster forms etc., which could actually be seen as even more of a violation of the players' right of publicity.

If you are using player names in rosters, then (according to their argument) you are in violation. You aren't suddenly off the hook because you are doing it by hand. It is true that they may not take the time to go after you because they know you can't survive as a business doing it that way but if you are making any kind of serious money, they WILL go after you whether you are doing it online or not. I'm not even saying they WANT to go after your company. I'm saying they HAVE to go after your company. If they are aware of a violation and don't defend their rights, it can seriously damage their ability to sell licenses in the future. They really have no choice but to sue you.

BUT IT COULD GO EITHER WAY

Some people are scared of a lawsuit because they think it is too "iffy". As one member put it, "There is no way to predict which way a judge or jury will go, no matter how right we think we are."

First off, there is no jury. In a declaratory judgment you are really just asking a judge to make a ruling and interpret the law as it applies to our case.

Second, let's say we sue and lose. How is that so much different than what we have now? Right now they think they have the right to charge for licenses and if they win they would STILL have the same right.

"Yes but then you have made them mad and they won't give us licenses."

If they refuse to grant licenses, it isn't because we made them "mad". What is this, 2nd grade? If the judge rules against us, we immediately file a suit or ask the judge to make a ruling on whether they have the right to limit licensing. That is a whole other argument but monopolistic practices and business interference comes into play. Even other federal agencies get involved at that point (i.e. antitrust lawsuits like the one against Microsoft).

Heck, even if you are dead set and trying to negotiate a "deal", isn't it better to negotiate a deal from a position of leverage with a pending lawsuit filed? This is exactly what CDM has done. The MLB doesn't want to risk losing this case either (which should tell you something about how confident they really are about winning it.) They have $50 million dollars riding on the outcome.

Ultimately, I fear that we will be unable to unite under a common cause and instead will be picked off one by one. We can either fight, or we are all done; if not this year, certainly in the near future. One thing I know for sure. Every day we wait, their case grows in strength... and they know it.

Sincerely,
Devoted Fantasy Football Fan
or simply (DFFF) as some people are calling me

If you want to get involved you can email James Serra, head of the committee set up by the FSTA (mailto:james@footballsoftware.com)
He is a great guy and I'm sure he would be interested in hearing everyone's views.
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