In its two-year history, Major League’s Baseball’s Internet arm has been a
story of swing-and-miss but with the specter of a baseball strike just a week
away, there are nervous jitters that money will be flushed down the drain.
As millionaires (players) and billionaires (owners) squabble over how to cook the golden egg, executives at Major League Baseball Advanced Media (MLBAM) are tight-lipped
about the ramifications for MLB.com, the
league-owned portal that runs the Internet operations for all 30 franchises.
“We are hoping there won’t be a strike and that’s all I’ll say. We’ll
remain optimistic that an agreement will be reached (between the players and
the owners). Until that changes, we’re not going to talk about what happens
if,” MLB.com spokesman Jim Gallagher told internetnews.com.
Gallagher refused to discuss back-up plans to deal with a work stoppage but
with down-to-the wire wild card races in several divisions and the playoffs
around the corner, MLB.com officials are nervous that its cash cow would be
put out to pasture.
MLBAM’s trump card is the live pay-per-listen audio streams of games, which
is being powered by Seattle-based RealNetworks as part
of a $20 million, three-year deal inked in March 2001.
The GameDay Audio service sells audio webcasts for the full 162-game season
direct from the MLB.com and Real.com Web
sites and it is also the jewel in Real’s premium service. Officials from
RealNetworks could not be reached to discuss what would happen if there is
no baseball after August 30 but insiders say there are plans to offer
alternative streams to affected users.
The returns on the play-by-play audio, which goes for $14.95 per season on
MLB’s own site, have been disappointing since MLBAM introduced the
subscription-only plan at the start of the 2001 season. Minor technological
hiccups initially marred the service but, once things were straightened out,
the sites signed up about 120,000 paying members in 2001.
This year, the subscription base has grown to around 155,000, a number
Gallagher claims was “on track with our projections” but, privately, MLB.com
officials aren’t happy with the returns. Although the 155,000 subscribers
(for all the site’s paid services) is over and above those that pay through
the RealOne premium service, it is barely equal to a three-game attendance
total at a Yankee home series.
“For something this exclusive, we really should be doing much better. This
is really the only place to find a baseball broadcast online and we should
really be above the half-million mark for subscribers,” said a source
familiar with the inner workings of the New York-based MLBAM.
“A strike would absolutely kill us,” the source said, noting that the
post-season games generate a lot of business, mostly in memorabilia and
apparel sales from MLB.com’s e-commerce operations.
Not much is known about sales via RealNetworks’ gold pass subscriptions. In
2001, Real sold about 500,000 MLB audio subscriptions.
RealNetwork officials declined repeated requests for interviews.
Gallagher, who refused to even discuss a post-strike scenario, confirmed the
playoffs are a major source of business. “We’re on track to get to where
we expect to be in total (subscribers). A lot
of fans sign up in anticipation of the playoffs so there’s definitely a real
opportunity there,” he said.
The GameDay Audio service is not the only premium service that will be
thrown a curve by a work stoppage. MLB.com also makes money from the Condensed Games
package that offers a pay-per-view condensed version of all games, minus the
boring parts.
Condensed Games is a 20-minute on-demand highlight package of every game
played. It has developed a following, ironically, among New York baseball
fans that have been blacked out by the ongoing dispute between the Yankees
Entertainment and Sports (YES) network and Cablevision. For $4.95 per month,
fans with broadband access can view the entire game, minus foul balls and
long pauses.
All the site’s paid services — GameDay Audio and Custom Cuts — are bundled
together into what MLB calls ‘Total Ticket’ and sells for $9.95 per month.
An extended baseball strike, if it runs through the playoffs and World
Series, could badly hurt the MLB.com portal, which is financed by the
league’s 30 owners.
MLBAM, which has a $120 million commitment over four years from the league,
is believed to have used up about $90 million so far. The company, which
runs like a start-up out of offices in Manhattan, was expecting to be cash
flow positive by the time the World Series ends in October but a strike
could strikeout those plans.
“We just started our sophomore year and we’re projecting profitability this
year. This is unheard of in terms of a dot-com,” Gallagher said of his
200-employee firm earlier this year.
More importantly, MLBAM officials are also bracing for the public relations
fallout that will filter down from the fans’ disdain for a work stoppage.
Baseball owners and players are already feeling the wrath of fans on Web
message boards and radio shows. It is certain to affect MLB.com’s
operations too.
