Over the past two weeks, members of the media have come around on the dispute between MLB Advanced Media (MLBAM) and Sling Media, the maker of Slingbox.
For those that don’t know what Slingbox is about, it is a technology that allows you to “place shift”—the ability to use the Slingbox hardware with your computer and television at home, and watch that television from anywhere in the world via internet connectivity.
So, for example, if you are in Las Vegas, where six teams are blacked out due to overlapping territories, and your Slingbox-enabled hardware is outside of the blackout areas, you could get around the restriction (see the image below courtesy of Dan Werr that showed MLB's broadcast territories prior to the Expos relocating to Washington, DC and the creation of MASN)
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Why is MLBAM upset about this? Simple: With the ability to use Slingbox to get around MLB’s broadcast territories and blackout restrictions, the device breaks MLB’s satellite and cable user agreements, which might serve to undermine the ability to negotiate higher rates when those agreements are up for renewal.
The news from The Hollywood Reporter, Esq and News.com this week didn’t break any particularLY new ground, but did serve to underscore how this issue has broad implications for how content is distributed and protected in the digital domain. Last year, News.com reported on the dispute between MLBAM and Sling, as did I for Baseball Prospectus. The dispute is over whether place-shifting is simply redistributing content you have already purchased, or is it akin to "redistribution," much like what has transpired with the breaking up of free redistribution file sharing services like Napster. In the latter case (MLBAM’s position), fees should be associated with the technology.
Consider as well the fact that those that have Slingbox would not have the need for MLB.TV—another possible revenue blow to MLB.
While MLBAM has not yet filed suit against Sling Media, they continue to rattle sabers saying that legal action over the technology is under review.
This week, the National Hockey League jumped into the mix, by reaching an agreement with Sling for their upcoming Clip + Sling service. The sports agreement—the first of its kind for Sling—could undermine MLBAM’s case. Not only has the NHL inked an agreement for Clip + Sling, but so has CBS.
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As reported by Sports Business Journal, “the Clip + Sling service will enable Slingbox owners to easily create short-form video clips from content on their Sling player and e-mail links to them to anyone, including people who do not own a Slingbox.”
The revenues generated from advertisements within the clips would be shared between the NHL and Sling.
The NHL has been struggling to gain a stronger foothold in the television ratings, but while MLB and other sports such as the NBA and NFL have looked to control content distribution through traditional delivery methods, the NHL has embraced the internet as a deployment platform for content to their loyal fan base. The landmark agreement with Sling Media takes that approach a step further by allowing video distribution without borders. Not only are they unconcerned about the broadcast agreements and territories, they are embracing a technology that circumvents them, and gets video content in front of those that may not be engaged in packages such as NHL Center Ice, for out-of-market games.
The actions by the NHL are designed to grow fans by getting more content out to viewers, no matter the delivery method. Given the low ratings that the NHL has been attracting, the direction makes sense.
For MLB, the actions by the NHL are unfavorable, and are raising eyebrows. The NHL’s direction solidifies Sling’s position that expanding the ability for viewers to see a product is better than constricting it.
“Maybe they should be paying us,” said Blake Krikorian, Sling Media chief executive during a panel discussion at the 2006 Digital Media Summit in Los Angeles. “Seriously. I’m still failing to see how we’re hurting them or their brand. We’re allowing more people to see more baseball, with all the same commercials, and stay connected to their teams. How is that bad? It’s additive to what they’re doing. We don’t need to be charging people a monthly fee. They’ve paid for our device and they’ve paid their cable bill.”
And therein lies the crux of the arguments for the opposing sides to the place-shifting debate: Is the technology simply redistributing content you have already purchased? Or, is it much the same as the free-file sharing days of Napster, where content distribution breaks with intellectual property rights?
What will be interesting to observe will be the NHL’s traditional television viewership now that the Clip + Sling agreement is in place. If there is no discernible decrease in the ratings, and moreover, the NHL is able to point to Clip + Sling as a method of growing their fan base, MLBAM may find that making a legal case against place-shifting more difficult.
In the interim, MLB requested of all the owners to reevaluate their broadcast territories. While the grumblings from consumers over the arcane and convoluted black out restrictions have been a dull roar with Extra Innings, it will become a cacophony at earsplitting decibels when the MLB Network goes online in 2009 and with that the number of digital households being impacting by MLB’s television territories grows exponentially.
The battle between Sling Media and MLBAM will surely be fully engaged by then.
Maury Brown is the founder and president of The Business of Sports Network, which includes The Biz of Baseball and The Biz of Football (full launch coming in July). He is a contributor to Baseball Prospectus, and can be contacted here.