[M4IF Discuss] AAC Licensing proposal

[Jim Longo]

Thanks for your response Andrew.  The FAQ clears up my misunderstanding 
of Consumer (non-commercial) and Professional (commercial) quite nicely
from the faq
> Q. What is the difference between a "Professional" encoder or decoder 
> product and a "Consumer" encoder or decoder product?
> A. A Professional product is purchased for commercial (i.e. revenue 
> generating) purposes. A Consumer product is purchased or made available 
> for non-revenue generating purposes. Examples of Professional products 
> include broadcast encoders or high-end audio or audio/video workstation 
> applications. Professional products are typically used in a production 
> environment or within the context of a backend distribution system. 
> Examples of typical Consumer products include jukebox products for 
> creating a personal digital music library, portable digital music 
> players, DVD/CD players, or television receivers.
<<<<<
in light of that explanation the proposed license seems extremely fair.  
The only area that seems to beg for a different tier are commercial PC 
based encoders.  Audio editing programs that offer MP3 encoding options 
for $20 would now have to charge $40 just to cover their cost.
What is the distinction between high-end workstations versus many 
applications that can be used in a revenue generating production 
environment such as Peak, QTPro, etc.,
Again thanks for your clarification.
Regards,
Jim Longo
On Wednesday, April 3, 2002, at 12:04  PM, Fischer, Andrew wrote:
> Jim:
>
> Thanks for the opportunity to clarify some aspects of the MPEG-4 AAC
> licensing terms.
>
> Your first set of questions...
>>> I read this to be FREE products.
>>> This would be all the streaming players
>>> wouldn't it.  Does the maximum go for both?
>>>  What hardware can there be in this
>>> category - Free cell phones?
>
> ... relate to the licensing terms for PC-based software. The maximum 
> annual
> payments of $25,000 in the case of PC-based software decoders and 
> $250,000
> in the case of PC-based software encoders are intended to be flexible 
> enough
> to accommodate even business models that include the provision of 
> PC-based
> software at no-charge to end-users.  "Free" PC-based decoders are the 
> rule
> rather than the exception, and an annual fee of $25,000 is low-enough 
> for
> any company with a significant (understood as generating significant
> revenue) business to be able to offer PC-based AAC decoding on that 
> basis.
>
> These low annual maximum payments apply only to PC-based software.  A 
> CD or
> DVD player is not a PC, a PDA is not a PC, a portable digital audio 
> player
> is not a PC and  televisions, set-top boxes, or radio receivers are not 
> PCs.
> The "Standard Rates" (please see www.aac-audio.com/licensing) apply to 
> such
> devices.  It's true that properly equipped PCs can play CDs or DVDs or 
> even
> receive television or radio signals, and in the case of PC-based 
> playback,
> generous terms for AAC decoding are available.  This, in our view, is
> necessary in order to make MPEG-4 AAC an attractive alternative to both
> proprietary (WMA) or even MPEG (MP3) technologies which are available to
> companies that provide PC-based products at no or very low cost to
> end-users. We believe that this approach is essential for MPEG-4 AAC to 
> be
> successful.
>
>>> I understand this would be iTunes, etc.,
>>> That may be  a reasonable amount $250,000
>>> for Apple.  Again what hardware devices would be free?
>
> There are no royalty-free products.  In the case of PC-based decoders 
> and
> encoders, there maximum annual payments.  In the case of non-PC 
> software or
> hardware devices, there are no such "caps."
>
>>> This seems to me to be high if we are
>>> talking about QT Pro, or many other commercial
>>> software products that are in that price
>>> range, but probably acceptable for DVD-type
>>> players and any recording devices. If I understand
>>> this correctly we won't see many shareware
>>> software-based AAC rippers.  This is for
>>> instance much higher than the current mp3
>>> encoder licences isn't it?
>
> Here you are referring to the standard rates for Professional Products, 
> as
> opposed to Consumer Products.  For a definition of "Professional" vs.
> "Consumer" in this context, please see the AAC Licensing FAQ at
> www.aac-audio.com/licensing/LicensingFAQ.html Professional products are
> typically sold into the media production or distribution infrastructure 
> and
> command prices of hundreds to tens of thousands of dollars. In this 
> context,
> the AAC royalty rates are in keeping with the expectations of licensees 
> and
> the current practices of licensors.
>
> "Shareware software-based AAC rippers" are definitely not Professional
> products. The royalties for MPEG-4 AAC encoding are significantly lower 
> than
> the royalties for MP3 encoding - dramatically so in the case of PC-based
> software encoding where the maximum annual fee is capped in the case of 
> AAC,
> and not capped in the case of MP3.
>
> Best Regards,
>
> Andrew Fischer
> Director of Business Development, EMD
> Dolby Laboratories
> 100 Potrero Avenue
> San Francisco, CA  94103
>
> -----Original Message-----
> From: Jim Longo [mailto:jimlongo   mac.com]
> Sent: Tuesday, April 02, 2024 4:39 PM
> To: Discuss   lists.m4if.org
> Subject: [M4IF Discuss] AAC Licensing proposal
>
>
> Haven't seen any reaction on this list to the announced audio news.
> Although the dreaded usage fees are not contemplated, I am not sure I
> fully understand the language of the royalty structure.
>
>> Under the new license terms, licensees will pay the following royalty
>> rates for MPEG-4 AAC products:
>>
>> •  For a consumer (non-commercial) decoder product: $0.50 to $0.12
>> (volume-based) per channel
>> -  Royalty rates for PC-based software decoder products are $0.25 per
>> channel, up to a maximum annual payment of $25,000 per legal entity
>
> I read this to be FREE products.
> This would be all the streaming players wouldn't it.  Does the maximum
> go for both?
> What hardware can there be in this category - Free cell phones?
>
>> •  For a consumer (non-commercial) encoder product: $0.50 to $0.12
>> (volume-based) per channel
>> -  Royalty rates for PC-based software encoder products are $0.50 to
>> $0.27 per channel (volume-based), up to a maximum annual payment of
>> $250,000 per legal entity
>
> I understand this would be iTunes, etc., That may be  a reasonable
> amount $250,000 for Apple.  Again what hardware devices would be free?
>
>> •  For a professional (commercial) decoder product: $2.00 per channel
>> •  For a professional (commercial) encoder product: $20.00 per channel
>
> This seems to me to be high if we are talking about QT Pro, or many
> other commercial software products that are in that price range, but
> probably acceptable for DVD-type players and any recording devices.
> If I understand this correctly we won't see many shareware
> software-based AAC rippers.  This is for instance much higher than the
> current mp3 encoder licences isn't it?
>
>> There are no royalties or usage fees for content distribution in AAC
>> format, either in electronic form or in packaged media.
>
> At least this seems a good omen of the current thinking on the subject.
>
> Regards,
>
> Jim Longo