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Baseball fans face Web's slide from free to fee

Scott Zalkind, a San Francisco Giants fan living in Seattle, feels he has a right to listen to baseball for free. For 26 years, since the age of four, summer has meant tuning the radio to one Giants game after another.

When he moved to Seattle a year ago, nothing changed. Mr. Zalkind continued to follow the Giants by listening to Web broadcasts on KNBR, a San Francisco radio station.

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Recently, however, Major League Baseball decided to charge a fee to listen to Web broadcasts. Fans, understandably, are not happy.

"I feel burned, " says Zalkind. "Charge me for everything and I'll walk away."

Making people spend money for something that has always been free is no easy task. Yet that task has become central to Web-based firms as the Internet in general attempts to slide safely from free to fee.

Major League Baseball believes that if it can make the transition, it is sitting on a goldmine.

Until last year, individual Major League Baseball teams controlled all aspects of their media deals. Various television contracts arranged by teams are now worth millions of dollars.

But in March, the league's newly formed marketing and new media arm struck a $20 million deal with RealNetworks to turn Webcast baseball games into a subscription-only service.

For $9.95 a season, fans can sign up for "Gameday Audio" and hear almost 5,000 games broadcast live over MLB.com with RealNetwork's streaming audio RealPlayer software.

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For another $20, a fan can sign up on Real.com and get six months of "GoldPass" service - better, more reliable audio and real-time statistics.

The moves have not generated a lot of applause, at least so far. RealNetworks has yet to release any audience numbers since the service started April 1, a bad sign in the company's bid to lure advertisers. MLB.com has signed up 90,000 subscribers - only about double the number of fans who fill a park for a single game.

Innumerable details have yet to be worked out, most notably technical difficulties such as a lack of bandwidth and malfunctioning software. While these problems will likely be remedied over time, the tougher obstacle will be the fans.

John Hogan, a New York litigator, works in the shadow of the World Trade Center. He couldn't listen to Yankees games in his office until WABC began transmitting the games through its website. It recently stopped.

"Now I'll just read about the Yankees in the paper," says Mr. Hogan.

WBAL, a station in Baltimore with local rights to broadcast Orioles games, only stopped playing them on WBAL.com in the face of potential lawsuits. Visitors to WBAL.com are urged to complain to Major League Baseball.

The issue particularly rankles station manager Jeff Beauchamp, because the Web transmissions will continue to use the commentators he pays.

Many station managers say they were shocked to learn that the broadcast rights they own to a professional team's games are owned by Major League Baseball when the signal moves from the airwaves to the Web.

But the misunderstanding seems to be the result of what happens when a business that hasn't changed much in 50 years grapples with new technology. Major League Baseball told radio-rights holders a couple of years ago that it reserved Internet control of game broadcasts.

"Problems have just been about communication," says Bob Bowman, president and CEO of MLB Advanced Media. "We need to do a better job explaining what we are doing."

Behind much of the discontent is not only the perception that radio, which relies on advertising for revenue, is free, but also the haphazard way the New Economy has evolved.

"The Internet got off on the wrong foot, with people thinking there was a [sea] of free content," says Scott Ehrlich, vice president of programming at RealNetworks. "But that was actually recycled venture capital money paying for it all. Now we're creating models that are sustainable at a very, very low price."

Scott Doniger, a Forrester Research analyst who covers sports and digital advertising, said sports fans will ultimately accept the fact that "nothing in life is free," but it may take years.

Major League Baseball has a target date of 2003 for profitability from Web broadcasts, a time frame Mr. Doniger considers extremely optimistic.

While fans concede a season's games for $9.95 is a great price, Gameday Audio will need a lot more than 90,000 subscribers to get advertisers to look beyond huge TV and radio audiences.

Still, there are corners of the earth that may be ripe for greater baseball coverage - Major League Baseball estimates more than 100 million people worldwide follow the game.

"We would like to think that we'll have a million subscribers in five years," says Mr. Bowman. But even that won't touch the penetration television and radio still have in some local areas - Major League Baseball estimates that more than 100 million people worldwide follow baseball.

For some, the glitches and the obstacles and the costs and the reluctance of fans to pay for what they once enjoyed free all adds up to another Internet disaster.

"The dotcoms are drying up," observes Bob Agnew, operations manager and program director for KNBR, the San Francisco-based station from which Scott Zalkind got his Giants games after his move to Seattle.

Within two years, he predicts, Major League Baseball will abandon Web broadcasts and radio stations will once again be able to put games for free onto the Web.

There are, however, already signs of fan adoption, albeit small ones. Brad Harris moved from Cincinnati to Missouri a year ago and considered keeping up with the Reds, the team he grew with.

But the demands of setting up home in a new place led him to start following the Cardinals, the team he follows free on the radio.

He hasn't pulled out his credit card to get Gameday Audio, but he is having second thoughts.

"Considering what people pay for cable, I think $10 is tiddly dink." If the Reds are in the World Series, he may sign on.

Central to success of sports online: video databases that users can browse

The biggest determinant of the financial success of online baseball programming may be a piece of software.

The video archival and retrieval systems developed by Virage Inc. in San Mateo, Calif., could open up elusive revenue streams for Major League Baseball and other Internet publishers.

For MLB.com users, that will mean the ability to call up game highlights by pitch, play, player, team, and just about any other variable they can think of.

So far, the companies using the software to build up content databases tend to be entertainment players such as ABCnews.com, MarthaStewart.com, the National Hockey League at NHL.com, as well as big corporations including Boeing and Coca-Cola.

Indeed, such large companies are the only ones with the cash to spend on what most say is a long-term investment.

Consumers aren't exactly clamoring yet to receive video through their computers, although many sites quietly offer it. It will also probably be some time before companies get the relevant technologies up to snuff, and figure out exactly what consumers are willing to pay for.

"People will accept paying for content they don't currently have, if they can use it easily and it's what they want," says Scott Doniger, a sports and digital advertising analyst at Forrester Research in San Francisco. He predicts streaming video will really take off when today's applications are merged with interactive television a few years down the road.

The real question for companies developing video databases is how the business model will work. Even Internet research companies say subscriber revenue will only account for about 5 percent of revenues in five years.

"We are a media company and we expect to continue to be heavily advertiser supported," says Mitch Feinman, vice president of strategic development at ABCnews.com.

(c) Copyright 2001. The Christian Science Monitor


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