siliconvalley.internet.com/news/article.php/983771
By Clint Boulton March 1, 2002 MPEG LA and others explain Yankee Group analyst Ryan Jones, whose specialty is scrutinizing strategies for digital media and entertainment, sees it this way: "I think MPEG LA kind of missed the boat in terms of setting a royalty schedule that was advantageous to them for MPEG-2," Jones told InternetNews.com. "MPEG LA kind of let the horse out of the barn and overcompensated for that with the MPEG-4 terms...I expect a bit of change [in the terms] from the intellectual property holders that make up MPEG LA." Like M4IF, however, Casanova said Apple isn't panicking, noting that the fees are not "cast in stone." Larry Horn, vice president of licensing and business development for MPEG LA, said that the MPEG LA patent holders remain in discussion over how to make the license work. ISMA has already come out and said the industry can expect to see a downward re-adjustment. It's not as if MPEG LA didn't understand the potential for dissent upon unleashing such a proposal. When it announced the terms, MPEG LA Chief Executive Officer Baryn S. Futa noted: "The patent owners understand the risks inherent in a start-up technology in which companies large and small are asked to make a pioneering investment and are sensitive to the role that their licensing model will play in that process." Horn called the proposal "our first shot out the box and was the consensus of patent owners." "We continue to hold discussions with the patent holders, and the terms are subject to change," Horn explained. "Our goal is to create feasible licensing programs that serve a market need. We take all of the opinions serious and at the end of the day, we are intent on having a viable licensing product. We're listening and revisions are quite possible." That said, Horn & Co. think a model involving usage fees is tenable. MPEG LA is looking into how it would be modified. "Our philosophy is -- we have no intention of taking money where money was being charged or made. The idea here was to ensure that remuneration was being offered to patent holders." As for suggestions that MPEG LA may be trying to compensate for fees missed with MPEG-2, Horn disagreed, explaining that MPEG-2 charges royalties on the end products, which include encoders, decoders, file servers, and packaged media such as DVDs. As MPEG-4 is streamed, MPEG LA determined that a usage fee was required because there is going to be a different level of distribution involved, particularly in wireless products, where MPEG-4 will be used on cell phones and personal digital assistants and such. "What you try to do [for MPEG-4] is find something that fits the stream of commerce," Horn said. "Because it's distributed more freely, usage fees would help spread compensation across the value chain and better reflect the nature of the technology."
RealNetworks' and Microsoft's take
While some groups (media included) are quick to point out that open-source and proprietary groups are diametrically opposed, RealNetworks and Microsoft have both demonstrated a desire to listen. Microsoft is, after all, an MPEG LA patent holder and first tinkered with the standard a few years ago. Since December, RealNetworks has offered MPEG-4 support through server and client-side plug-ins of Envivio's MPEG-4 technology. Its next version of RealSystem will feature native support for MPEG-4. As Mark Donovan, group manager for B2C solutions at RealNetworks pointed out, this is consistent with the firm's strategy to provide support for some 50 media formats to give customers greater choice and flexibility. "What the market is telling us about MPEG-4, is that while current mobile and embedded devices have limitations and are not upgradeable at this point, there are an awful lot of people building new products that want to bake that into the device," Donovan noted. David Caulton, Microsoft's lead product manager for its Windows Media Division, said Microsoft had an early start with MPEG-4, noting that it demonstrated interoperability with the standard in 1999 with an MPEG-4 camera made by Sharp. However, Microsoft's next generation of the Windows Media Player, code-named "Corona," doesn't support MPEG-4 like RealNetworks does. "We are constantly monitoring its value," Caulton told InternetNews.com. "The big thing for you to look at is 'what kind of tools are being made with it'?" Caulton noted that Microsoft has offered a superior digital media experience through Windows Media Player and said that unless users have a specific preference for MPEG-4, users tend to choose Windows or RealPlayer. He also said Microsoft understands the issues surrounding the licensing terms and that "everyone is wondering 'how much is this going to cost me'? What is this going to cost my customers? But we think it's great that progress is being made in terms of video licensing terms." Still, Caulton is wondering when the market will see more mature MPEG-4 tools and licensing terms are sorted out and more tools emerge, MPEG-4 will remain "all about possibilities."
Where does MPEG-4 go from here?
With consumers buying such devices as set-top boxes, PCs and all manner of mobile gadgets, Jones said MPEG-4 "opens up the entire digital marketplace of the Web" because it will let consumers match devices with networks and content sources in the value chain. Jones contended MPEG-4's existence as an open standard, as opposed to a proprietary one, can determine the distribution of consumer influence and revenues around the digital media value chain, which, of course, consists of content, distribution networks, applications and services and devices. "MPEG-4 gives consumers the flexibility to jump away from the influence of the broadband service provider to experience the full media value chain," Jones told the ISMA group. Jones' prognostications aside, MPEG-4, it seems, is in a period of stasis until the licensing fee issues are sorted out. But that hasn't stopped firms such as MPEG-4 software maker iVAST, which just this past week opened the doors of its MPEG-4 development studio in Los Angeles. Loaded with facilities for developing rich media based on the standard, the firm will use it to provide creative services, extended resources and training to its customers. And competition versus MPEG-4 progresses, as On2 this week unveiled a new version of its compression codec, VP5, which its boasts has a 50-percent improvement over its previous codec VP4. Of the company's attempt to gain momentum with its video compression technology while judgment hovers over MPEG-4 licensing terms, On2's McIntyre said "VP5 can do at 340k what VP4 does at 500k and other proprietary codecs do at 600k." "This advance means that On2 compression no longer has any direct competitors for higher-quality video at lower data rates, not Windows Media Player, not Real 8, not Sorenson and not Divx. This codec is in a class by itself." Competition indeed. MPEG LA patent holders include: Canon Inc.; France Telecom; Fujitsu Limited; Hitachi Ltd.; Hyundai Curitel Inc.; KDDI Corp.; Matsushita Electric Industrial Co. Ltd.; Microsoft Corp.; Mitsubishi Electric Corp.; Oki Electric Industry Co., Ltd.; Philips Electronics; Samsung Electronics Co. Ltd.; Sanyo Electric Co. Ltd.; Sharp Kabushiki Kaisha; Sony Corp.; Telenor AS; Toshiba Corp.; and Victor Company of Japan Limited. |
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