[M4IF Discuss] hourly usage fee for MPEG4

[Ken Goldsholl]

Re: [M4IF Discuss] hourly usage fee for MPEG4You are absolutely correct in stating that the model needs to be worked out.  Since use of MPEG4 over broadband is virtually non-existent, it is hard to predict how the services will evolve, which is one reason why all potential service models need to be considered.
Whether it is the cost to the consumer or the cost to the service provider is irrelevant.  It affects the cost of operating the service, and that is important to the service provider, who will make the ultimate decision about what system to deploy.  If subscriber equipment is amortized over three years, and we add $30/yr in licensing costs to the cost of the equipment, we would effectively be increasing the cost of the STB by 30-50%.  subscriber equipment is probably the biggest capital expense when deploying new technology, so it really isn't in the noise.
Ken
  ----- Original Message ----- 
  From: Rob Koenen 
  To: 'Ken Goldsholl' ; discuss   lists.m4if.org 
  Sent: Thursday, February 21, 2024 10:21 AM
  Subject: RE: [M4IF Discuss] hourly usage fee for MPEG4
  While I share the concerns over broadcast and all one-to-many use cases, 
  we need to be a bit cautious here. There have been multiple remarks to the 
  effect that: 
  * the model for broadcast still needs to be worked out
  * according to current thinking, it would be based on statistical measures 
     not actual usage. So there is no need for logging of actual hours viewed.
  Also be careful with talking about the 'cost to the consumer' as the consumer.
  the consumer is not asked to pay use fees. 'The cost per consumer' is more 
  accurate (Yes, of course, in the end it is likely that the consumer pays 
  something anyway.)
  Rob
    -----Original Message-----
    From: Ken Goldsholl [mailto:kgoldsholl   oxygnet.com]
    Sent: Thursday, February 21, 2024 9:09
    To: discuss   lists.m4if.org
    Subject: Re: [M4IF Discuss] hourly usage fee for MPEG4
    Ben,
    Even at $30/year, over four years, that would mean the cost to the consumer for this technology is $120!  What other technology embedded in a low cost consumer electronic product costs that much?
    In regards to the five cents per hour example, in a few years the cost of VOD servers will be next to nothing (<$20/stream for the server), and with servers located at the head end or DSLAM, the bandwidth costs will also be free. If 30-year old tv shows and movies are avilable for free on broadcast tv, there will be a limit to how much people will pay for this.  Maybe its five cents or ten cents per show, maybe its $7.95 for a whole month of reruns, talk shows, and other low value content that the subscriber watches 75 hours per month of.  The MPEG tax could represent almost 20% of that cost.  In the long run, content retailers will have incentive to switch to alternative formats that do not impose an hourly fee to use.
    I actually don't think the billing part would be that difficult, but it could ned up costing someone alot of money.  If a system is all MPEG4 (the STB probably would be fixed for one delivery mode), then the subscriber mgmt system just has to log the hours the STB is on.    If a viewer keeps their STB on all the time, the license fees could run almost $15/month.
    Given that a video display is required for viewing MPEG content, it is unlikely that the cost of any product with a decoder in it would be greatly affected by a one-time license fee of $3-5.  There won't be too many $25 STBs around.  If someone does come up with a low cost product that utilizes MPEG4 (like a cell phone), then they can negotiate a different deal.
    Ken
      ----- Original Message ----- 
      From: Ben Waggoner 
      To: discuss   lists.m4if.org 
      Sent: Wednesday, February 20, 2024 3:53 PM
      Subject: Re: [M4IF Discuss] hourly usage fee for MPEG4
      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, we're 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 don't see the actual cost of the license fee being a problem, but the administration that it would require. I'm looking at doing some on-line education for video compression, and based on the realistic audience for my niche, I'd be looking at something under $30/year (1500 user-hours).
          As for the $0.05/hour for watching archival content, I'm confident customer price sensitivity doesn't exist at that point - you wouldn't 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 wouldn't make or break a business (especially since your competition would have to pay it too).
          So, again, I feel the problem with the fee isn't the amount, but the administrative burden it implies. If MPEG-LA can make the terms very clear to implement. I'd 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 isn't 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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