Proposed MPEG-4 Licensing Draws Fire

"It's great that the news has been announced," said Koenen. "The news itself requires more clarification. It is now clear that we need a discussion." In response to these proposed terms, Koenen has created a discussion list for M4IF members and non members, basically anyone who has a business interest in MPEG-4's evolution, to explain their position by signing up for the list here. Koenen plans to communicate concerns to the MPEG LA. "We very much hope that the results of such discussions will be taken into account by the licensors," said Koenen.

Other issues await clarification as well. For example, enterprise customers may not have to pay any per minute use fees, which would make MPEG-4 an affordable option, if the full and final license matches the apparent intent of the summary. Also, it may also be possible to provide to person-to-person conferencing without paying a use fee, which could have a huge impact on the use of MPEG-4 in the conferencing market. What kind of per-minute fees would apply to the education industry, if any, is unclear. The MPEG LA was not available to shed light on these issues or to indicate when a full license might be released.

There are areas where the use fees may not be a significant deterrent, such as pay-per-view, where direct revenues would cover every licensing fee. Jordan Greenhall, CEO, DivXNetworks, explains, "The license is extraordinarily skewed toward any content that generates revenue. A cable operator might use MPEG-4 for VOD but wouldn't use it for any of their broadcast channels." Greenhall also points to favorable licensing terms for hardware vendors wishing to embed technology in PDAs, video phones, set-top boxes, and other devices. "It's cheaper than any other open standard license out there. Much cheaper than MPEG-2," said Greenhall

David Caulton, lead product manager, Microsoft Windows Digital Media Division, is upbeat, explaining, "We think this represents great progress towards the complete licensing terms for MPEG-4, and look forward to the remaining Systems and Audio licensing terms." Microsoft had used MPEG-4 Visual in previous Windows Media products, but plans to compete with its own technology going forward. The company is still an MPEG-4 patent holder though, and stands to receive licensing revenues from MPEG-4 Visual.

Even with the uncertainty and a rising groundswell of questions, the release of some licensing terms is an important milestone in the movement of MPEG-4 from the drawing boards to the marketplace. It's clear that in order for the standard to move forward, licensing has to be resolved, and this is a step in that direction. What's not clear is where in the marketplace it will fit and which markets will be able to best employ the technology.