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September 11, 2006

The Ledger Domain

Place Shifting and the MLBAM

by Maury Brown

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There's no place like home.
--Dorothy in the Wizard of Oz

We are drawn to our television sets each April the way we are drawn to the scene of an accident.
--Vincent Canby

Ah, Home, Sweet Home. Our domiciles are our safe havens, and while most people love to travel, most all look forward to coming back to that familiar and safe place we call home. Those who go on extended trips may bring something with them: something from home that reminds them of that safe harbor … a picture… a trinket… their television… Wait a second, their television?!?

If you haven't heard, there's a new technology buzz word out there called "Place Shifting" that, in some senses, allows you to do just that. With "Place Shifting" technology it is no longer a matter of where you are in the world that dictates what you have to watch on television, but rather whether you wish to watch your television service that you have at home, just as long as you have a piece of hardware hooked up between your cable box and your computer. As long as you have internet access--no matter where you are in the world--you can watch anything that you can watch at home on your television.

San Mateo, California-based Sling Media, Inc., the makers of SlingBox, has created one of the hottest gadgets on the market these days. At a retail price of $200 you can geographically "Place Shift" your television with no additional fees or costs.

While Sling Media has popularized the technology, Sony has had a line of products called LocationFree for two years, which works under the same premise as the SlingBox: stream your television through their hardware and your computer across the internet. This past week, Sony reintroduced two new products within the LocationFree line of products which they hope to dovetail off of the SlingBox buzz. The only reason Sony's products haven't taken off in popularity is due to ease of setup: The SlingBox is straightforward out of the box, while LocationFree is a bit more complicated to get going.

Into this mix comes MLB Advanced Media. As I reported back on July 24th in Blackout Blues, MLB has a convoluted and arcane hodgepodge of television blackout territories in which content--be it over the internet, cable, satellite, or otherwise--is controlled, and regulated by MLBAM. "Place Shifting" would allow users to ostensibly get around certain aspects of the territories, with the home location where the television stream is coming from your house. So, if you're in a location that is blacking out the Red Sox, and you live on the West Coast, with a SlingBox or LocationFree setup, you can get around the territorial blackout area.

MLBAM believes that Place Shifting technology breaks MLB's satellite and cable user agreements. MLBAM thinks that those who purchase devices such as SlingBox or LocationFree should pay additional fees for "redistribution," much like what has transpired with the breaking up of free redistribution file sharing services like Napster. The case being made by MLBAM is that media redistribution now comes with a price. While audio can be purchased on CD, a service such as Napster, iTunes, or satellite radio charges a fee to compensate those who control the content initially. In the case of MLB games being broadcasted, MLBAM sees the need to be compensated for the redistribution of their content through SlingBox or LocationFree.

Sling Media, understandably, sees the matter differently. They argue that the content has already been purchased and it's a matter of the consumer accessing what has already been paid for through extended technologies. It's not the same as illegal file sharing because the person who purchased the content isn't redistributing to others, but rather only accessing it themselves in a different location.

Both sides seem unwilling to relent on the matter. At the Digital Media Summit in Los Angeles this past June, representatives from MLBAM and Sling Media squared off during a panel discussion on the topic. On one side was George Kliavkoff, executive vice president of business for MLBAM, and on the other was Rich Buchanan, Sling Media's vice president of marketing. At one point Kliavkoff said to Buchanan, "Your interpretation of the (cable and satellite user agreement) is wrong."

At this point in time, the battle between companies that deal in "Place Shifting" technologies and the MLBAM has yet to reach a courtroom. There are currently no lawsuits involved between the sides. The chance of that occurring, however, seem fairly good. The reason is simple: currently there are an estimated 100,000 owners of SlingBox alone. If Sony's LocationFree takes off, the number of consumers using "Place Shifting" devices could grow exponentially.

There's an interesting twist in all of this. Sling Media received a large amount of seed money ($46.5 million) from satellite operator EchoStar Communications, and cable giant, Liberty Media, Inc. Who has been locked in finalizing negotiations on the purchase of the Atlanta Braves? Liberty Media.

Coming back around on the conflict, given the MLBAM's aggressive nature on content control, matters between the sides should become more divisive as opposed to congenial. A lawsuit over this matter seems only a matter of time. To use a bad pun… Stay Tuned.

And, don't think MLB isn't willing to go after one of their own when it comes to content delivery

As an aside to the situation with Place Shifting technology, don't think that MLB isn't willing to take on one of their own when it comes to interactive technology.

This past Friday, MLB informed the Dodgers that their fledgling Video On-Demand channel (Dodgers On Demand) launched with Time Warner on August 9th violates the same 2000 broadcast agreement that is at the center of the "Place Shifting" debate. A special board that has Bob DuPuy as one of its members ruled against the Dodgers and Time Warner.

As the 2000 agreement reads, clubs have the right to "one-way transmission of radio and television," but MLB sees the ability of users to stop, start, fast-forward or rewind the content as "interactive" and therefore, part of the 2000 agreement. As Bob Bowman, President of the MLBAM said, "The board interpreted that user interaction with the content, which is at the heart of what interactivity is, is a two-way communication. The board made the determination that Dodgers on Demand is a two-way communication and therefore interactive."

As of this writing, the Dodgers have not appealed the board's ruling.

Maury Brown is an author of Baseball Prospectus. 
Click here to see Maury's other articles. You can contact Maury by clicking here

Related Content:  The Who,  Shifting,  Products,  Media,  Mlbam

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