MPEG Industry Forum

Meeting:	9th M4IF meeting, Fairfax, VA, USA, May 2002
Document:	m4-out-20017
Source:	Rob Koenen
Title:	Summary of the MPEG-4 Licensing Situation by the President
Status:	Final
Purpose:	Output of Fairfax meeting

Summary of the MPEG-4 Licensing Situation by the President

This document reflects M4IF President's summary of the discussions during the Fairfax M4IF meeting on licensing.

MPEG-4 Is Ready
- The market, press and general public are beginning to understand & appreciate MPEG-4
- The market is ready to deploy the technology
- MPEG-4 has strong competition from proprietary technology in all of its target markets
- Market parties are scared away by what they understand to be the licensing terms for MPEG-4 Visual
- It's Make or Break for MPEG-4; time has run out
- Timing is of the essence. The standard has been frozen 3.5 years ago, and licenses should have been available already. M4IF is very concerned over this issue.
Licenses should be Reasonable and Non-Discriminatory
- Reasonable must include "Competitive"
  - The licensing scheme shall allow products to be built that are competitive to proprietary solutions
  - ... shall allow competitive services to be offered
  - The license shall not put the standard at a disadvantage
- Reasonable in all MPEG-4's target markets:
  - Mobile communication/retrieval
  - Internet multimedia
  - Packaged media (DVD)
  - Broadcast
  - Consumer devices (home stereo, portable devices)
  - Education
  - Surveillance
  - ... and everything else someone may want to use MPEG-4 for
  - MPEG does not prescribe how to use MPEG-4
M4IF gets signals from many parties interested in MPEG-4 that they are considering to not use MPEG-4 because of the terms as proposed and/or the unavailability of licenses
Most of the concern on licensing is over the use fee in Visual
- The burden of tracking it
- The high total amount it can result in
- The effect on the margin in some markets, notably Internet Streaming media business (e.g., ad-supported)
- The fact that it is unacceptable to all broadcasters (M4IF notes that broadcast terms were never announced, only 'hinted at')
- The fact that the approach is different than what the competition offers and is not viewed as competitive
No news about MPEG-4 Systems has been heard
- It is of great concern to M4IF that nothing has been heard yet.
- We understand that the evaluation of the independent evaluator has resulted in the determination of some (6?) holders of essential patents
- Systems is crucial to realizing MPEG-4's advanced features
- We understand that this could be resolved soon after Visual licensing starts, but we recommend it be dealt in parallel to Visual rather than after Visual
- M4IF notes that the situation in Systems is different than in Audio and Visual, because it is much more modular in its tool set
It is noted that Visual and Audio licensors take a different approach
- To being 'Non-Discriminatory'
  - Visual: the same terms across all markets.
  - Audio: the same terms for all within a certain market, but different terms for different applications. E.g., lower royalties for Software PC-based technology in the consumer market.
- To having a use fee:
  - Visual: there is a use fee, and its exact form is still under discussion.
  - Audio: no use fee
In the discussions, alternative approaches have been mentioned not coming from the licensor group, notably addressing the Visual licensing scheme (some of these overlap with the ideas that live within the licensor group) Suggestions that were made:
- Do away with use fee
- Have higher fees on (professional) encoders
- Charge percentage of product price (end-user price or other basis for establishing per unit value)
- Differentiate between different markets
- Have fee per user
- Take an MPEG-4 AAC-like approach for MPEG-4 visual as well
- Charge percentage of content remuneration
- Make exception for educational use
- Make exception for not-for-profit organization
- Make exception for open-source SW projects, R&D;
- User-based model rather than usage-based model
  - Broadcast could be in the user/subscriber/customer based model
  - Are there yet other metrics?
- Lower and Upper thresholds on the user/usage fee?
  - How much are they?
  - There is concern about 'the business in the middle'
- Use models that account for usage at the production side rather than the consumption side