Microsoft confirmed that it will offer audio and video of Major League Baseball games via its MSN service, and AOL will offer live audio streams and 20-minute video clips for each game. The Microsoft deal,

worth as much as $40 million over two years, according to sources, is one of online sports programming's most expensive to date. MSN will offer these streams as part of MSN Premium, a $9.95-a-month software package that offers Net services and content. MSN's dial-up customers will only have access to MLB's live audio streams.

In addition, the software giant will sell MLB subscription packages through its MSN Web portal. MSN visitors can subscribe to MLB.com All Access, which includes live video and audio, for $19.95 a month or $99.95 a season; MLB.TV, a video-only subscription, for $14.95 a month or $79.95 a season; or MLB.com Gameday Audio, for the live radio broadcasts only, for $14.95 a season.

"We can now drive our subscriptions business in a way we were unable to drive it before," Yusuf Mehdi, MSN's corporate vice president, said in a telephone interview. Mehdi declined to comment on the terms of the deal but expressed confidence that it will be profitable.

Microsoft isn't the only company expected to soon strike a deal with the baseball league. America Online plans to announce a two-year, $9 million deal with MLB Advanced Media (MLBAM), the league's Web business, to offer live audio streams and 20-minute video clips for each game, the sources added. AOL will offer the games free of charge to its AOL for Broadband members, most of whom pay $14.95 a month on top of their broadband bills for the service.

....Microsoft in recent months has made streaming video a priority. The company in October unveiled a free, ad-supported streaming-video initiative called MSN Video. The service launched with video clips from its MSNBC joint venture, as well as other programming from NBC's news and entertainment shows. As with MSN Video, Microsoft will sell advertising on top of all live video feeds. Microsoft's Mehdi, however, was unsure if ad spots will appear on MLB's March 28 opening day, when the New York Yankees face the Tampa Bay Devil Rays in Tokyo.

....Gaining MLB could offer a significant boost for Microsoft, which competes with RealNetworks over video-streaming software. The hefty premium paid for an unproven video-streaming model was not surprising to some analysts.

"I think, to an extent, it's Microsoft being Microsoft," said Michael Goodman, an analyst at The Yankee Group. "It's a cost center for them to acquire this content, and if it's a money loser, it's a money loser. What it gives them is an anchor program. It gives them a high-profile piece of programming to build around."

The deal also pushes the envelope on the price online distributors must pay for popular programming. Just like television networks that pay billions of dollars for rights to National Football League or the Olympics games, the Internet is quickly becoming such a valuable medium for sports fans that Web portals are more willing to open their wallets. [CNET]