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Some interesting stuff on MLBAM. Here’s the key part, in my eyes:

The tech operation, known officially as Major League Baseball Advanced Media (MLBAM), pulls in about $450 million a year. About half of that comes from fans who pay $120 a season to watch games live over the Internet, with the rest generated by advertising alongside free content and other extras.

I’m not sure I’ve ever seen an estimated revenue breakdown for MLBAM before. If these figures are correct, than MLB is almost certainly taking the right approach to streaming live games. $225 million is a significant figure for what is still a fairly immature business.

But it’s the other side that’s even more interesting. For most sites, advertising is the dominant source of revenue. For MLB.com, it’s only half. That certainly says something about MLB.com’s other businesses; but it also says that advertising is probably not their top priority.

How much is $225 million in ad revenue for a major media site? Well, it’s about equal to what YouTube will take in this year. That seems like a favorable comparison for MLB.com, since YouTube has much greater traffic.

But YouTube is also hamstrung, since it can only monetize 3-4% of its videos (those which are submitted by users in their partner program). MLB.com can place ads on or adjacent to all of its videos, and can take advantage of MLB’s existing relationships with major advertisers.

The key, as I’ve written before, is increasing supply, improving quality, and charging high CPMs. There are lots of dollars to be earned through this approach, but MLBAM has consistently spent more resources in other areas.

The funny thing is that by promoting traffic and advertising first, MLBAM would probably do more to promote MLB.tv than they could in any other way. Logically, this would also lead to increased ticket and merchandise sales. These are, of course, MLB’s core businesses, and are far more important than wringing out some marginal dollars on “Baseball’s Best” subscriptions.

Still, impressive numbers on the MLB.tv front, certainly a bit more than I would have expected. If MLB.com ever became an advertising juggernaut as well, MLBAM would no longer be just a small piece of the Major League pie.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

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