[M4IF Discuss] Questions about the hourly usage fee for MPEG4

[Ken Goldsholl]

One industry that will surely profit greatly from the proposed licensing
scheme is the legal profession.  The plan requires compliance from parties
that are not part of the agreement, i.e., the consumers, as until a file is
decoded, it's just data and not utilizing anybody's intellectual property.
Will consumers be required to pay a monthly fee to the licesne holders to
use a decoder?  there already is existing technology that has no hourly
usage fees, so why would someone switch over to a new service that costs
more?  they do not care about how the content arrives at their home, that is
not their problem.
If an encoded file is shipped from distributor to retailer to consumer, it's
still just a file.  The only person who has taken advantage of the MPEG IP
is the company that encoded the file, and they paid their licensing fee to
use the encoder.  Charging companies that move the files around is almost
analagous to charging FedEx royalties when they ship a product that utilizes
copyrighted material (like a DVD) or patented technology.  The MPEGLA may
see it otherwise, but it will most likely be decided in court.
To address Rob's question about the terms being fair and reasonable, I don't
know from what perspective they could be considered either.  Most
technology-based products require an investment in the creation of
intellectual property, and for years companies would earn a return on their
investment by selling the product.  Then the software industry was born, and
the expectations for return on investment changed dramatically, as software
vendors seem to think that their technology is more important than all of
the other technology used in creating the products that made software
useful.
With the proposed licensing structure, and new pricing strategies by some
large software companies, now it seems companies are not content with 99%
gross margins. Instead of selling a product to customers that they pay once
for, they want a recurring revenue stream, where you never own the
technology, but just rent it.  I vaguely recall a similar case where
telephone service providers were forced to let subscribers own their own
phones instead of renting them.
If an MPEG4 set-top box sells for $200 and is used for 1000 hours per year
over three years, the usage cost for the STB will be $60.  After the STB has
been amortized, the MPEG4 IP holders will still be receiving a revenue
stream.  Their is a lot of technology needed to build that STB, far beyond
the MPEG4 decoder.  Why is it reasonable to charge for the hourly use of the
MPEG4 technology but not for any of the other technology in the product?
> Ken and all,
>
> > Under the proposed licensing scheme, there won't be any
> > hourly usage fees
> > for decoding MPEG4 content stored on DVD.
>
> Correct. The use fee is paid when the content is pressed on the disk.
>
> > So if an MPEG4 movie is first
> > downloaded to a storage device, and then viewed some time after the
> > download, just as a user would a DVD, would there be an
> > hourly usage fee?
>
> Good question. My intuition tells me that the use fee is dues when
> content is being downloaded.
>
> This bring us to the question: if the content is never
> consumed - what then?
> This is especially relevant in the context of Broadcast.
>
> However, we only have seen hints at what the broadcast model looks
> like, and it mentions something like 'statistics'. Statistics could
> account for non-viewings ... Let me leave it at that.
>
>
> The interesting and underlying question in your questions is that
> content moves from place to place and there may be intermediate
> stations before it hits an end users.
> Say A(uthor) -> B(etween) -> C(onsumer)
>
> Questions - I guess to MPEGLA:
>
> * Where does the fee get charged?
> * if in B (say, a Bekamai CDN)
> - will B even know it *is* an MPEG-4 file???
> - Assume for the sake of the argument that a simple download
>   takes place of a zipped MP4 file from a non-MPEG-4 specific
>   server. (I know zipping doesn't make much sense, but let's
>   just assume) Can B even be deemed to be infringing?
>   (Disclaimer - I Am Not A Lawyer)
> * if with A - how will A know how many C's get to view the content?
> * What does a practical accounting scheme look like that is imposed
>   by the license structure?
>
> Best to all,
> Rob
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