[M4IF Discuss] FW: [M4IF News] RE: [OpenDTV] MPEG-4 Licensing analysis

[Rob Koenen]

Thanks for your comments Jordan.
> 1. Current license is a sweetheart deal for the Enterprise 
> space.  Unless the
> "use fees" somehow apply to teleconferencing and "e-learning", you are
> looking at a very cheap license in that space.
> 
> 2. Current license effectively kills broadcast and "streaming" markets,
> possibly excluding VOD.  By example, an MSO using MPEG-4 to deliver 100
> channels to 500,000 subs would run roughly $1.5M in "use fees" alone - or
> roughly 9% of their gross margin.  Not a chance.  

It's these calculations and arguments that we need to discuss.
For instance: are fees only due when programs are watched or
are they due when delivered? The release gives some clues (looks
like actual audience is the key, not the streaming itself), but 
we need more information. 
> What is particularly concerning as a service provider is the lack of
distinction 
> between different content-monetization models.  Ad-supported broadcast
video 
> monetizes viewers very differently than, say, VOD.  More specifically, a
$0.02 
> per hour fee has much less of an impact on a $20 per viewer WWF Smackdown
PPV 
> than it has on a $0.30 per viewer ad-supported episode of Smallville.
This lack of
> distinction in the license could have profound negative effects on the
entire
> market.
> 
> 3. The decoder fee for software decoders is a big problem. The model is
> straight-forward: big companies (companies that can afford to pay a $1M
cap
> per year) can attempt to promote their MPEG-4 decoders in software.
Everyone
> else is more or less out of the game.  I share the concern that when the
> competition is proprietary technologies such as WMA and Real that give
away
> their software decoders for free, it is going to be difficult for MPEG-4
> vendors to establish an adequate footprint to jumpstart the market.  

This is an important point. If service providers choose a different 
format because MPEG-4 is not competitive, then we have a problem ...
> I also
> find it odd that the licensing fees are identical for encoders and
decoders
> when margins for those products are certainly *not* the same in the
market.
That depends on which market. Much more expensive encoders would be
prohibitive for mobile 2-way communication.
> In general, I match the consensus that licensing fees arranged more around
> encoding than decoding or content would be considerably more likely to
> promote the standard and generate the kinds of synergies necessary to
ensure
> its comprehensive success.  I look forward to the committee's release of
> additional licensing models as the market develops over the coming year.

Just to be sure we are all on the same page: "the committee" means
"the license holders". (And to explain the obvious one more time: M4IF 
has no say in licensing, it can only make its opinions known to licensors.
But as M4IF represents the view of the MPEG-4 supporting community, I think 
license holders will take these opinions into account).
Best,
Rob