Yesterday, a federal judge in St. Louis ruled that fantasy
baseball leagues can use player names and statistics without
a license from Major League Baseball. This decision, assuming
it is upheld in higher courts if appealed, will have far-reaching
consequences for everyone who plays fantasy sports.
Here is a little background on yesterday's decision. In 2005,
Major League Baseball Advanced Media (MLBAM) bought the exclusive
rights to own all game statistics from the MLB Players' Association
for $50 million. MLBAM decided to only award seven licenses
for the 2006 season, all to the "big boys", ESPN,
CBS Sportsline, Yahoo, etc. The reported cost of this license
was $2 million per season. One of the companies that was shut
out of this license, CBC Distributing and Marketing (CDM) decided
to sue. CDM claimed that the players' names and statistics are
readily available in newspapers throughout the country and,
as such, are public information, and a license is not necessary.
Major League Baseball claimed that intellectual property laws
and so-called "right of publicity" make it illegal
for fantasy leagues to make money off the identities and stats
of professional players. This was a very interesting take on
these laws since, in 1996, MLB won a case in which it claimed
that the use of video of a player without that player's permission
was permitted, based on the freedom of press principles. It's
amazing how $50 million can turn one's opinion 180 degrees.
The greediness of Major League Baseball is truly astounding
and has, for once, been stopped.
Yesterday, Judge Medler wrote that the First Amendment takes
precedent because CDM is disseminating the same statistical
information that is found in newspapers every day. "The
names and playing records of major league baseball players as
used in CBC's fantasy games are not copyrightable," Medler
wrote. "Therefore, federal copyright law does not pre-empt
the players' claimed right of publicity."
In an e-mail, Dan Okrent, a co-founder of the original Rotisserie
League Baseball, described the ruling as "wonderful….
The only thing that saddens me about it is that there won't
be a public trial, during which MLB's incredible greed would
have been on public display."
It should be noted that while this ruling was specific to fantasy
baseball, there's no reason to think that the ruling would be
any different for fantasy football, fantasy hockey, fantasy
basketball, fantasy NASCAR or fantasy tidily-winks.
Today, it costs about $5,000 to obtain a daily feed of statistics
from any of the major sports. If you want live scoring, it's
more than double. The majority of this ridiculously high cost
comes from professional sports leagues charging exorbitant licensing
fees for the rights to use the players' names and statistics.
Thanks to this ruling, fantasy sports participants should now
expect to see those fees drop considerably
There are literally hundreds of companies, mostly Web based,
that would like to use these statistics but due to the prohibitive
costs of licensing, have either used the statistics without
a license, or have been forced out of business.
CBS Sportsline, ESPN and Yahoo figure to be hurt by increased
competition from these companies. They will be forced to lower
their prices to compete with many small businesses that are
sure to appear once the cost of data feeds gets down to a reasonable
level.
There are two winners today. One is the fantasy baseball player,
who will see many more less expensive options when running their
fantasy leagues. The other is the small business owner, who
now can compete on a more level playing field with the "big
boys" in the industry.
This extra competition can only spawn further innovation and
different types of fantasy games, making them available to even
more people than the estimated 15 million players today. All
in all, August 8, 2006 was a landmark day in the world of fantasy
sports and, for once, the little guy came out on top.
For the full court brief, visit
http://www.cdmsports.com/CDM_vs_MLBAM_opinion.pdf
For the court's conclusion, visit
http://www.cdmsports.com/CDM_vs_MLBAM_conclusion.pdf