Real Networks CEO Rob Glaser said the proposed licensing fees for MPEG-4 could mean its “early death” on the personal computer, according to a CNET article.
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“The licensing structure is putting the technology on a path to become irrelevant in the PC industry,” Glaser said at a press conference following his keynote speech at the Streaming Media West conference.
MPEG LA, a licensing body representing 18 patent holders of the MPEG-4 technology, is considering a plan that would require licensees to pay 25 cents for each MPEG-4 product, such as an encoder or decoder, with fees capped at $1 million a year. The plan also suggests charging a per-minute use fee, equivalent to two cents for each hour encoded in the format that includes content on DVDs.
Such fees would make it cost prohibitive for media players such as RealNetworks’ RealOne or Apple Computer’s QuickTime to support the emerging standard. Apple has already rejected the proposed licensing terms, which is why QuickTime 6 is finished, but not released.
Apple is delaying its release until MPEG-4 video licensing terms are improved. The MPEG-4 licensing terms proposed by MPEG-LA (the largest group of MPEG-4 patent holders) includes royalty payments from companies, like Apple, who ship MPEG-4 codecs, as well as royalties from content providers who use MPEG-4 to stream video. Apple agrees with paying a reasonable royalty for including MPEG-4 codecs in QuickTime, but does not believe that MPEG-4 can be successful in the marketplace if content owners must also pay royalties in order to deliver their content using MPEG-4, the company said in a February press release.
“MPEG-4 is the best format for streaming media on the web, and QuickTime 6 is the first complete MPEG-4 solution,” said Philip Schiller, Apple’s senior vice president of Worldwide Product Marketing. “MPEG-4 is poised for great success once the licensing terms are modified to allow content providers to stream their content royalty-free.”
Larry Horn, vice president of licensing and business development at MPEG LA, told CNET that he disagrees with Glaser’s assessment, saying “it’s premature” since the group is still defining the licensing terms.
“Final terms of the license have not yet been developed, and we’re working on them,” Horn said. “The marketplace can see that the patent holders are working hard to address some of the concerns, and we will come up with a license that is acceptable to the marketplace and everything should work out just fine.”
MPEG LA and patent holders are considering use-based payments that place royalties on products and services that receive remuneration, such as encoding MPEG-4 for DVDs, CNET reports. Horn said he expects a final licensing structure to be in place in a few months.