The YouTube video, by all accounts, was breathtaking. A slick, professional-looking and quickly popular highlight reel of Washington Capitals star Alexander Ovechkin, chock-full of one twisting, turning, impossible-angle goal after another, highlighted by his still-legendary 2006 goal scored from behind his head while being dragged down to the ice.
And the NHL, the Capitals, Ovechkin’s camp and the TV rights holders had absolutely nothing to do with the clip’s creation or distribution.
“That was really a big ‘wow’ kind of moment,” said Troy Ewanchyna, NHL director of new mediabusiness development, recalling the situation from two years ago. “You look at that clip, and that was the beginning of a really active discussion in our offices about how we needed to get a stake in the ground in this space.”
The NHL, along with several other major sports properties, now operates a successful channel within YouTube, representing just one part of a fervent effort by sports content owners to manage theirintellectual property rights online.
The strategies to manage, guard and exploit those rights vary widely from property to property, with the sweep including the NHL’s wide array of online content syndication deals to the NFL’s more restrictive stance keeping all game highlight clips on NFL.com, and most nongame team video limited to 45 seconds a day for those without TV rights.
But the core intellectual property question remains the same: how best to monetize one’s digital rights and develop a brand, while at the same time staying open to some degree to important grassroots, fan-driven interactive efforts such as blogging, video posting and user-generated material.
The task is undoubtedly growing more complex by the day: There exist more than 300 video-sharing sites on the Internet of some meaningful size and scale, a number that is still growing, and video by far stands as the most popular and valuable online content for any sports team or league. But photos, scores, logos, fantasy, commentary and a bevy of other forms of expression and information stand alongside the video material, none of which is generally included in a standard TV rights agreement.
And within the music industry, one of the few businesses to generate the same kind of personal and visceral fan passions as sports, there resides a stark and crucially important history lesson: Record labels and the Recording Industry Association of America spent much of the late 1990s and early 2000s suing music downloaders — by and large their biggest customers historically — and in part because of those battles still have yet to gain a firm grasp of the digital content explosion that has radically altered that industry.
“There’s been such a broad proliferation of online video sites in particular, that we’re all trying to figure out the right relationships,” said Steve Grimes, NBA Entertainment vice president of interactive services. “It’s a lot of looking at each situation individually and determining what works, and each video partner of ours is a little different. We want to build our brand and the strength of NBA.com through these partnerships, and thankfully we’ve been able to do that. But it’s also a very important goal to be where our fans are wherever possible. We’re all trying to strike that delicate balance, and it’s not easy.”
Striking that delicate balance, not surprisingly, has created numerous battles in and out of court (see page 16), including the NCAA’s dust-up with the blogging community, YouTube’s many skirmishes with content owners, and CDM Fantasy Sports’ successful lawsuit against MLB Advanced Media and the MLB Players Association.
And as the legal record in many cases did not fully contemplate the modern digital age, and as such provides relatively few precedents to help, the money surrounding digital sports is now becoming large enough to create serious friction and drama.
The NFL has placed stricttime limits on the use
of videoshot at team facilities.
MLBAM and the NFL’s digital businesses are now thriving operations that gross in the mid-nine figures annually. The interactive hubs of the other major leagues also are showing major growth. Annual fantasy sports revenue is conservatively estimated to have surpassed the $1 billion mark, and the ad market for any type of top-tier online sports content shows no signs of slipping, even amid recent economic weakness.
“We’re dealing with a major intersection in a lot of these situations between First Amendment rights and commercial rights,” said Josef Volman, co-chairman of the sports practice for Burns & Levinson, a Boston law firm specializing in intellectual property issues. “This is only going to heighten when we get in the not-too-distant future to an advanced PDA that does all the things an iPhone can do now, but also shoot, edit and send video. These IP rights now have significant value, and we have a lot of areas in the law that could use some additional clarification. So we’ll likely see a lot of entities being very active in policing those rights.”
Politics of partnership
For now, however, the order of the day remains trying to work with online video distributors rather than fighting them en masse. But picking which one, or ones, and striking a deal still is far easier said than done. Even if most of these agreements are based upon revenue sharings of related advertising funds, and even if the reach and popularity of the sites is obvious, properties are still working through a long checklist that includes commitment to antipiracy and operational controls.
“We get a lot of calls, particularly since it’s out there that we’ve done a lot of deals,” Ewanchyna said. “But you have to keep your head and not sign just anything. These things work at the back end because of the work you do initially. Economics are only one part of the equation.”
MLBAM, for its part, has experimented with only a few online video outlets, notably iTunes for paid downloads, Joost and media partners such as ESPN and Yahoo!. And company executives will not pursue as open a strategy as the NBA or NHL.
“Each league is doing the right thing for them,” said Bob Bowman, MLBAM chief executive. “For some leagues where it’s more of a total ad play, getting into a lot of places is very important and makes sense. For MLB.com, getting traffic back here to buy tickets, subscriptions and so forth, is important. So the approach is different. But in our view, it shouldn’t be a complete free-for-all anyway. Some limitations are important.”
The NFL has carried that mind-set several steps further, setting up online video rules that quickly created a fervent wave of industry debate. Before the 2007 season, the American Society of Newspaper Editors and AP Sports Editors unsuccessfully lobbied for major changes to the policy. Beginning that fall, play began with the league controlling all highlight video online, rights holders such as Fox and ESPN getting roughly three minutes a day of video involving team personnel on team property, and every other media outlet and blog limited to 45 seconds a day.
The friction soon died down and the NFL found itself with sharply increased revenue from NFL.com. And interestingly, many news outlet Web sites learned to adapt, greatly buttressing news conference video and the like with their own analysis, which is not subject to any time limits.
“The next complaint we get from fans about not seeing what they want online will be the first,” said Brian Rolapp, NFL vice president of media strategy. “There simply hasn’t been an outcry about being deprived of content.”
Takedowns
Even with successful video syndication deals, properties and sites alike are struggling with how to deal with takedown requests for unauthorized or unlicensed content.
Rapidly evolving video technology increases
the challenges on leagues to manage content.
The Digital Millennium Copyright Act, a near-decade-old federal law, provides safe harbor to sites that take down infringing content upon request from the copyright owner. In real terms, the time elapsed from the issuance of a takedown request to the actual content removal can be as little as a few minutes or few hours.
But no one in the industry professes anything close to full happiness with the DMCA provisions, and pervasive feeling exists that the law is overdue for some type of regulatory review. The act has proved itself to be very reactive, and it does not meaningfully lessen the time or effort sports properties must spend guarding their content. MLBAM employs four people tasked with policing copyright violations, while other major outlets stand at similarly high alert.
“It’s still a lot like a Whack-a-Mole game,” said John Kosner, ESPN.com senior vice president and general manager. “It requires a lot of vigilance.”
Others are even more irate: Viacom last year sued YouTube for $1 billion in copyright infringement damages, with the dispute on a slow track toward a trial either late this year or in 2009. Amid that conflict, work continues on more proactive content management solutions. YouTube, now owned by Google, is in beta development of a new tool called Video Identification that seeks to combine advanced tagging mechanisms with an expanded set of controls for content owners. Time Warner and Disney are among the media outfits participating in the early testing.
| Turnkey Sports Poll |
| The following are results of the Turnkey Sports Poll taken in January. The survey covered more than 800 senior-level sports industry executives spanning professional and college sports. |
 Who should own the intellectual property of a ... |
|
| ... PLAYER’S NAME? |
| Player | 47.35% |
| It’s in the public domain | 28.16% |
| League | 11.02% |
| Club | 9.39% |
| No response/Not sure | 4.08% |
|
| ... PLAYER’S STATISTICS? |
| It’s in the public domain | 46.12% |
| League | 37.55% |
| Club | 10.61% |
| Player | 2.86% |
| No response/Not sure | 2.86% |
|
| ... PLAYER’S IMAGE? |
| Player | 52.65% |
| League | 18.37% |
| Club | 15.51% |
| It’s in the public domain | 8.57% |
| No response/Not sure | 4.90% |
| Source: Turnkey Sports & Entertainment in conjunction with SportsBusiness Journal. Turnkey Intelligence specializes in research, measurement and lead generation for agencies, brands and properties. Visit www.turnkeyse.com. |
“In theory this could be great,” said Andrew Bangs, YouTube sports community manager. “The technology is moving at its pace, and the goal is to have something that is fully functionable and scalable. We’re hopeful.”
Fantasy shakeout
While the video copyright landscape is still in its early phases, the fantasy sports industry stands in a much more defined place, thanks to the CDM lawsuit. The St. Louis-based operation, now owned by Fun Technologies, successfully sued MLBAM and the MLB Players Association for the unlicensed use of player names and statistics for use in commercial fantasy games.
A 2006 district court victory was upheld last year in federal appeals court, and petitions to have the case reheard in appeals court were denied. A last-ditch attempt to have the case reheard in the U.S. Supreme Court is anticipated but is not likely to succeed.
Already, the NFL Players Association has seen a drop in its fantasy licensees, as has MLBAM. And for those with fantasy licensing contracts with MLBAM, such as Yahoo! and ESPN, the deals are far larger and include other interactive rights well beyond fantasy.
“Except for those under contract, I certainly don’t expect a lot of people knocking on our doors,” with regard to fantasy, Bowman said. MLBAM is now eyeing a possible renegotiation of its interactive rights deal with the players union.
Rudy Telscher, the St. Louis attorney who represented CDM, is fielding calls about parties interested in seeing where the decision can be used as precedent. The legal decision rested primarily on First Amendment rights trumping the players’ rights of publicity, which in this instance had been bundled in a group licensing agreement and sublicensed to MLBAM.
“There’s definitely more litigation to come on this front, in some fashion,” Telscher said. “The question now is where are the boundaries of this decision? There’s been sort of a broad rethink on all sorts of rights of publicity, that they’ve been taken too far in some instances, and there appear to be some logical extensions, perhaps baseball cards for example, where this decision can go.”
Blogging battle
Much of the current intellectual property worries surround the potential and real implications of emerging technology and new outlets, and how these advances can outstrip the ability of content owners to guard their assets.
The NCAA, however, last year found itself in a very old-school battle in the blogosphere. During last June’s College World Series, the NCAA ejected a credentialed Louisville (Ky.) Courier-Journal reporter who was filing live updates on a game, believing the posts were violating exclusive broadcast rights held by ESPN.
The ejection created a firestorm of media criticism, and ironically, the NCAA would have essentially been powerless to do anything about the blog had the reporter been offsite watching the game on ESPN. Six months later, the NCAA emerged with a typically Byzantine set of live blogging rules that vary widely by sport, with sports such as bowling and gymnastics permitted 10 live posts a session, while football was granted three a quarter and an additional post at halftime.
Several intellectual property lawyers interviewed for this story see the NCAA rules as potentially easy pickings for a lawsuit, as the blogs are widely seen as protected speech. Also, the NBA’s conceptually similar fight in the 1990s with Motorola over live score updates distributed via pages resulted in a victory on appeal for Motorola. But to date, no news outlet has seen the economic urgency from live blogging to necessitate an extended legal fight with the NCAA.
“The league sites have become media sites in a lot of instances,” said Brian Grey, FoxSports.com senior vice president and general manager. “But the league sites won’t have certain aspects editorially that are important to the fan. We’re not sure league sites will be able to offer all the analysis and opinion that’s important. And if they don’t, can they make that up through assets and IP? I’m not sure that can happen either, which gets you back to striking a balance and finding partnerships that work.”
