Friday, 27 September 2013

Electronic Arts' Settlement is a "Win" for Consumers

Electronic Arts' settlement of the O'Bannon-Keller litigation, assuming it gets approved by the court, is a big win for the consumer because it creates a new market opportunity for numerous video game producers.  These companies can now compete against each other by negotiating with college players, collectively as a group, over the payment of a licensing fee for the exclusive right to use clear images and actual names of players, which will result in a better quality game with better graphics for the consumer.  And the payment of a licensing fee to the players might not increase the price of the game for the consumer.  Case in point, EA pays a licensing fee to NFL players for the use of their names and images, yet the price of EA's Madden NFL game is the same as the price of its NCAA Football game in which a licensing fee is not paid to the players.  According to basic principles of supply and demand, price is determined by what the consumer is willing to pay.

The underlying basis for recognition of publicity rights is the prevention of unjust enrichment.  For years EA has been profiting from the free use of college players' identities, and now they must disgorge the unjust gain.  The "Principles of Amateurism" should not be used as an excuse by a video game company or anyone else, including the hundreds of people who run big-time college sports and pay themselves multi-million dollar salaries, to unjustly enrich themselves at the expense of the players whose efforts make such revenue generation even possible.

The NCAA, the conferences and the universities can continue to dig their heels in and keep fighting this battle but, even if they end up winning the legal battle, the principles of supply and demand will ultimately prevail.  Baseball won the battle in Curt Flood's antitrust lawsuit but it ultimately lost the war, and not necessarily because of the National Labor Relations Act but essentially due to principles of supply and demand.  There is a small supply of elite college football players with unique skill and talent known as Four- and Five-Star recruits who are not fungible and are in huge demand because the product of big-time college sports, and the revenue it generates for all of those who produce it, simply does not exist unless these players agree to participate.  Can big-time college football make the same money with "scab" college players?  What would happen if these players ultimately got together and simply decided not to participate unless certain conditions were met, and not necessarily the right to compete for wages (which these players would concede changes the product of "amateur sports") but rather the right to receive payment for the commercial use of their names/likenesses, the right to have an agent negotiate with professional teams, or the right to better insurance and more scholarship funds?  And they do not have to be declared employees by law nor form a labor union to do it.      

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