[M4IF Discuss] hourly usage fee for MPEG4

[Ben Waggoner]

Ken,
    Bear in mind that the total cost per consumer per day of the license fee
would be like $0.08 for someone watching four hours of MPEG-4 TV a day.
Nation-wide, we¹re only talking about $16M/day assuming 200M Americans watch
four hours of MPEG-4 content a day ­ this is really a rounding error
compared to the size of the entertainment industry.
    I don¹t see the actual cost of the license fee being a problem, but the
administration that it would require. I¹m looking at doing some on-line
education for video compression, and based on the realistic audience for my
niche, I¹d be looking at something under $30/year (1500 user-hours).
    As for the $0.05/hour for watching archival content, I¹m confident
customer price sensitivity doesn¹t exist at that point ­ you wouldn¹t lose
80% of your audience by going to $0.25 an hour, so no one would ever charge
that little. Maybe for radio, but certainly not for video. Anyway, bandwidth
costs and server amortization would be many times $0.02/hour, so the extra
fee really wouldn¹t make or break a business (especially since your
competition would have to pay it too).
    So, again, I feel the problem with the fee isn¹t the amount, but the
administrative burden it implies. If MPEG-LA can make the terms very clear
to implement. I¹d hate to spend $900 of my time figuring out how to pay them
$10.
    Perhaps waive the fee for anything under $100/year, easy to use
accounting integrated with servers, and a clear and generous definition of
what content isn¹t revenue producing?
Ben Waggoner
Interframe Media <http://www.interframemedia.com>
Digital Video Compression Consulting, Training, and Encoding
on 2/20/02 3:27 PM, Ken Goldsholl at kgoldsholl   oxygnet.com wrote:
> When viewed in the context of paying $4 for watching a feature film, two cents
> an hour does not seem unreasonable.  However, for video on demand service to
> become ubiquitous, much more content than recently released movies must be
> available on the system, as that kind of service can not succeed with just a
> handful of titles.  If content that is offered on free television is also
> included in a service like subscription video on demand, then the hourly usage
> fee can render such a service unfeasible, which would have the ripple effect
> of suppressing demand for all VOD.  There could very well be reruns of old TV
> series that may cost viewers say, five cents per hour.  This usage fee then
> eats up a big portion of the revenue.
>  
> When viewed in the context of other technology, this proposal makes even less
> sense.  Yes, a significant investment was made by the patent holders to
> develop the MPEG4 intellectual property.  But the same can be said for
> virtually all other kinds of technology, almost all of which is paid for by
> the user when they purchase the product.  What is so special about MPEG4 that
> the creators deserve a perpetual revenue stream?  There are no recurring
> payments to the developers of the technology utilized in cars, computers,
> audio systems, basically every other electronic device.
>  
> The idea that reducing the upfront cost of the equipment to spread the
> proliferation of MPEG4 devices should be quickly dismissed, as a $2.50 royalty
> for the decoder in a set-top box will not slow down adoption of that device.
> An what about the other technology used in these products?  MPEG4 is just a
> small part of the technology needed for the digital video end-to-end solution.
> Will they be subject to hourly usage fees?

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