Major League Baseball Struggles to Reach Fans Online
Twenty-five years removed from his last minor-league at-bat, Joe Choti is gearing up for his fourth season in the big leagues. Instead of throwing out gazelle-quick middle infielders from his knees, he'll be picking off content thieves from his desktop.
Choti backstops the information-technology team at Major League Baseball Advanced Media, the subsidiary of Major League Baseball responsible for operating the 30 individual clubs' Web sites and the MLB.com site—and, most important, delivering live audio and video streaming from 97% of all professional baseball games to more than 840,000 subscribers logging on to MLB.com throughout the season.
What started out as an afterthought—the streaming of live baseball games over the Internet—has become a $130-million-a-year business for Major League Baseball, a sizable chunk of the more than $1.1 billion consumers shelled out in 2004 for Internet TV broadcasts.
Choti, chief technology officer and a former catcher in the Boston Red Sox farm system, not only has to attract and service more customers but also identify where they are—based on their geographic location—when they log on to watch games. To MLB owners, the extra revenue is nice, but it's Choti's job to make sure the Webcasts don't infringe on the multibillion-dollar contracts paid to owners by national and local television broadcasters.
"We couldn't have, for example, someone in Manhattan getting the live broadcast of a Yankees game because that would violate the rights agreement MLB has with local and national TV partners," Choti says.
MLB's revenue from TV events shown online is peanuts compared to the national and local television rights fees that line the pockets of all 30 MLB teams. Right now, Fox is in the middle of a six-year, $2.5 billion deal with MLB. ESPN has a six-year contract paying $851 million into the teams' coffers, while local television stations are paying from $6 million (Milwaukee Brewers) to $56 million (New York Yankees) a year for the right to broadcast games in their local markets.
To MLB and other businesses selling content of all types online, the ability to physically locate the device receiving content—in essence, defining boundaries in cyberspace—creates powerful sales and marketing opportunities.
As their first step, Choti and his staff must determine eligible and ineligible ZIP codes for Internet broadcasts of baseball games.
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"We have national [blackouts] and local [blackouts] to worry about, with up to 15 games a day," Choti says. "We can't afford to step on those broadcasting rights. We'd be pissing off the networks, which, in turn, would complain to the individual teams, which would then complain to MLB. It all runs downhill."
Who Is Out There? And Where Are They?
To avoid infringing on those broadcast and cable contracts, MLB Advanced Media installed software called GeoPoint from Quova, a Mountain View, Calif.-based company that specializes in finding the geographic location of Web site visitors. Quova—from the Latin term quo vadis, which means "Who goes there?"—uses a computer's Internet Protocol (IP) address as the starting point to determine the location of a computer in use.
An IP address—assigned to a computer by an Internet service provider—is a 32-bit numerical address written as four numbers separated by periods, such as 126.96.36.199. Like a house address, it helps one computer or network device find another computer over a network. In all, more than 1.4 billion IP addresses are recorded in five global registries.
Quova's software takes an individual IP address and searches the registries to find out which Internet service provider (ISP) owns that IP address, says Gary Jackson, the software company's vice president of operations.
As data moves over thousands of private and public networks—switching from region to region and country to country—to the MLB.com site, it passes through dozens of routers and gateways that form intersections throughout the Internet. Quova's software captures information about how traffic is routed to and from the individual IP address to create a network "map" that narrows down where the routers and gateways are located.Then, information on routers, gateways and other devices is compared to IP address registries housed in Quova's database.
Once this information is recorded in Quova's database, the company executives say the software employs artificial-intelligence algorithms to process the data gathered from servers connected to ISPs around the world to identify the location of the computer within a 20- to 50-mile radius.
Quova's network analysts then examine the raw data compiled by the database to determine how each ISP routes its IP addresses through the Internet. As they identify these patterns, the information is manually entered into the database for further deconstruction by the algorithms.
The locator software can also tell its customers whether the computer is connected to the Internet by a DSL connection or a cable modem or through a corporate virtual private network. This data is compiled to create a profile of each IP address.
The nit and grit of the geographic-locator software is its data delivery server. It's a Java-based application that includes an application programming interface (API) that can be integrated with other business applications. MLB Advanced Media links the server to proprietary point-of-sale applications to bolster the profile of a prospective subscriber—namely, identifying customers by ZIP code from their mailing address.
Choti says his 40-person information-technology staff implemented GeoPoint in about two weeks during the fall of 2002. The bulk of the time, he says, was spent testing and retesting the system.
"Basically, we were trying to break it," he says, by logging on from corporate VPNs, using anonymized proxies—a privacy service that allows users to visit Web sites without allowing anyone to gather information about which sites they visit—and logging on from satellite-based Internet connections. "But it held up," he adds. "It gave us the confidence we needed."
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The GeoPoint software was installed locally on the MLB.com and individual team sites. Once in place, GeoPoint updates itself by connecting back to the database in Mountain View. As visitors log on to these sites, their IP addresses are added to the database for future reference.
When a baseball fan goes to MLB.com to log on to a game, the software assigns a confidence rating, on a scale of 1 to 100, that helps the Web site operator decide whether or not to let the fan view a particular game.
Jackson says MLB Advanced Media won't approve the release of streaming video to an IP address that scores below 72; a lower score indicates that the computer in question is not likely to be in a ZIP code eligible to receive a live broadcast.
For example, a would-be customer dialing up from his PC in St. Louis would not be allowed to view the streaming video Webcast of the Cardinals game—home or away. But if that same Cardinals fan were connecting from a hotel room in Baltimore or from an Internet café in Prague, he'd be granted access.
Previously, companies could best determine the whereabouts of online customers by relying on the ZIP code associated with the mailing address for each customer's credit card account.
MLB Advanced Media still uses that information to help create a customer profile. But the personal data is now used in tandem with the IP address locator and the "confidence rating" to assess whether or not someone should be allowed to view the requested game online.
At MLB Advanced Media's headquarters on Ninth Avenue in Manhattan's trendy meat-packing district, Choti and his staff must also deal with complicating factors, such as the fact that some cities—Las Vegas, for example—fall under the broadcast territories of multiple MLB teams.
Little Room For Error
When a subscriber logs on to purchase a specific game from MLB.com, the GeoPoint software narrows down the computer's location by ZIP code and assigns its confidence rating. Then, MLB.com's software determines whether the ZIP code identified is eligible for the game requested.
Based on these calculations, the subscriber's request is either approved or rejected. If it's approved, the subscriber will receive a virtual token—essentially, a one-time use code—and be allowed to receive the video stream. If the request is rejected, the customer is denied access to the content and referred to the customer service department.
In the first week of the 2004 season, MLB Advanced Media's customer service department was contacted by more than 450 would-be customers denied access to games by the GeoPoint software. About 50 were trying to weasel a live feed of a game they couldn't receive. The others were eligible for the Webcast but for whatever reason—a rare dial-up connection using an obscure ISP, or connecting through a satellite provider with vague routing information—were shut out
"We all knew there would be strange little areas that we couldn't pinpoint," says Quova's Jackson. "Maybe it's a location that's right on the border of a ZIP code that's blacked out, but the actual person is outside of the blackout area."
After talking with the shut-out customers and learning how they were connecting to the Internet and their exact physical location, Quova's network analysts could remap the IP address and add it to the database. When another customer dialed up from a similar IP address, the updated information from those first denied service allowed the software to quickly approve those who followed.
Both Jackson and Choti say MLB games are a particularly nice fit for streaming media because there are so many games—more than 2,300 in the regular season alone—and they take place throughout the day and night. Fans traveling for business or living overseas can keep tabs on their team.
"It's the kind of thing you can have on in the office while you're working or at the airport waiting for a flight," Choti says. "Baseball's the kind of game where you don't have to watch every second of it. You can miss an inning or two and come back and still be able to enjoy it."
And by putting borders on the Internet, Quova's software is attracting interest from a variety of industries that need to identify where people accessing their Web sites really are.
Online gaming sites must know where prospective gamblers are located. It is illegal for casino owners to provide gambling on the Internet in Germany, China and the U.S. Failure to comply, though rarely checked, could potentially result in the owners losing their gaming licenses.
Retailers can customize sales and marketing not only to target customers in a specific location but to keep them out of legal trouble. V&S Vin & Sprit AB, the Swedish distiller of Absolut vodka, uses GeoPoint to make sure its content is only sent to countries that allow liquor advertisements.
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And instead of sending a generic Honda advertisement over the Internet, MLB.com one day could send a video pop-up to MLB.com subscribers watching games in Atlanta with information about specific Hondas on sale at Atlanta-area dealerships.
"Any time you can eliminate waste in advertising, you've increased the value of those consumer eyeballs," says Steve Vonderhaar, research director at Arlington, Texas-based Interactive Media Strategies. "When you can marry behavior habits of Web advertising with geographic targeting and multimedia communications, you could have what some advertisers would call a home run."
MLB Advanced Media Base Case
Headquarters: 75 Ninth Ave., 5th Floor, New York, NY 10011
Telephone: (212) 485-3444
Business: New media division of Major League Baseball operates the league and team Web sites, online audio and video broadcasts of baseball games, and other e-commerce ventures.
Chief Technology Officer: Joe Choti
Financials in 2004: Reported sales of more than $130 million. Company declined to disclose whether it posted a profit or loss.
Challenge: Determine physical location of subscribers and would-be subscribers logging on to MLB Web sites for streaming media.
- Identify physical location of 99% of computers logging on to receive MLB.TV games over the Internet, up from 93% in 2003.
- Increase revenue to more than$175 million in 2005, from $130 million in 2004.
- Trim number of customers denied access to content to less than 50 a week, from 450 a week.
- Install digital video equipment at all 30 Major League Baseball stadiums by the end of the 2005 season, up from 20.