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Friday, February 17, 2006

Baseball's Closed Platform Play
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Forbes makes mention of Major League Baseball's apparent closed-platform play with fantasy baseball. MLB is increasing licensing fees to fantasy baseball entities by $1.975M, up from $25k. The thought, it appears, is for MLB to grab more of the rents from fantasy baseball.

There are some interesting legal questions associated with this starting with who, if anyone, owns the stats and publicity rights? But Forbes assails MLB for alienating its fan base:

[I]t might seem odd that MLB is willing to alienate its most loyal fan base. Fantasy players subscribe to satellite service packages and watch the games that no one else cares about. On the other hand, MLB, which won't comment, dreams of taking its Internet arm public in a deal valuing the company at $3 billion. It doesn't need competitors.

I remain a staunch defender of entities' rights to "close," or at least limit the interoperability of platforms they own and develop -- see "Let Clearwire Be Clearwire", "Closed Coffee Platforms," and leave the iPod alone -- even if the business strategy proves to be wrong. This is a vastly superior system than the government mandating and monitoring the "openness" of a given platform.

All that said, I do think that MLB is making a prudential misjudgment about increasing the fantasy baseball licensing fees. Like Forbes detects, fantasy baseball is a complementary product to the main one of baseball. Fantasy baseball, which as an aside is vastly superior to the uninteresting and crude younger brother of fantasy football (baseball is a stats-driven game; football is not), should not then be looked at as an avenue to extract more rents from fans but as a way to draw more fans, and make them more interested in the game.

It also shows that once a platform is "open," or relatively so, then consumer expectations get set and it's damned near impossible to "close" it again. I would suspect that MLB will find this out the hard way.

posted by Ray Gifford @ 12:36 PM | Internet

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