MPEG-LA Announces No royalties on Free Internet Videos - Ever

This is a story I've been following for awhile. By way of background, MPEG-LA represents the H.264 patent holders and is charged with administering all licenses and collecting all royalties, which are paid by companies who build H.264 encoders, players and, in some instances, content. In the past, MPEG-LA hasn't charged royalties for content delivered free over the internet, though royalties were charged for web-based subscription and pay per view content encoded with H.264.

In February, MPEG-LA announced that the patent group had extended the royalty free policy for free internet content through December 2015. Today, they announced that they were extending this policy in perpetuity.

Of course, between then and now, Google open sourced the VP8 codec, creating a robust alternative to H.264. So what's the practical impact of MPEG-LA's decision? Unfortunately, probably not that much. Here's why.

It's all about HTML5, the standard that obviates the need for plug-ins like Flash and Silverlight. For H.264 to become the HTML5 standard, it has to be supported by all browsers, which would cost both Mozilla and Opera $5 million a year, which is the maximum yearly royalty obligation under the MPEG-LA license. Microsoft and Apple already pay the maximum for decode licenses relating to the Silverlight plug-in and Safari/iDevices, so H.264 support in their respective browsers costs them nothing extra. Google has more money than the Obama administration, so their decision to include H.264 support in Chrome isn't surprising, though after spending over $100 million for VP8 and getting it to market, they may rethink their decision to license H.264.

Mozilla, at least, has the cash to pay the $5 million, but their organizational charter only allows them to incorporate open source technologies. A quick look at Opera's financial statements tend to indicate that they couldn't pay, but as much as I like their browser, they're less then 2% of the market.

Interestingly, if Mozilla licensed H.264, it would allow HTML5 producers to standardize on the H.264 codec, which would do more to promote HTML5 than any other potential single action by any single company I could think of. According to a recent survey that I produced for streamingmedia.com, 54% of respondents who were considering HTML5 support rated the lack of single codec either a serious concern, or a very serious concern. Lack of HTML5 browser penetration was rated even more of a concern, but that will resolve in time. The codec issue appears to be a permanent problem which will force producers to encode in as many as four or five different formats in the short term, and at least two in the long term.

So, while I think MPEG-LA's decision is a good move, unless and until Mozilla adopts H.264, it's not going to break the HTML5 logjam. VP8 will also become popular with producers delivering pay per view or subscription based content to desktop computers, though obviously these producers will need to license H264 to access the iDevice market.


Comments (6)

Craig Seeman
Said this on 8-27-2010 At 09:44 am

Jan, I've heard a VERY DIFFERENT take on the strategy of what's transpired.

Google releases WebM to foment the result that MPEGLA would make H.264 royalty free for "free" video.

Content creators fears are quelled with MPEGLA decision.

HTML5 H.264 becomes the standard.

Google Chrome overtakes Mozilla FireFox which refuses to budge, as you allude to, as FireFox users move to a browser that supports HTML5 H.264.

Google's Ad Revenue (their primary business) grows as they now control a Desktop/Laptop browser to view ads just as they're trying to do with Android.

Yes, it won't impact Mozilla. It will impact content creators though and that will impact people's browser preferences.

Said this on 8-27-2010 At 06:16 pm
Interesting take. Google is Mozilla's biggest revenue stream (I thought) and they could shut Mozilla down quicker (and without spending $100 mil for On2) by not renewing their contract.

Not sure how much MPEG-LA's extension will affect content creators - how many choose a codec today based on potentially paying for it in 2016? The browser preference, we'll have to see. Mozilla really is the most popular browser when you consider that no-one has to install IE, it comes pre-installed. As long as Flash is king, it really doesn't matter.

I guess it's up to the content publishers - how many will start supporting HTML5 with H.264 and not VP6. I'm shocked at how little HTML5 activity there has been to date; perhaps next year will be a turning point.

Thanks for weighing in.

Jan
Jim
Said this on 8-27-2010 At 07:38 pm

"So, while I think MPEG-LA's decision is a good move, unless and until Mozilla adopts H.264, it's not going to break the HTML5 logjam. VP8 will also become popular with producers delivering pay per view or subscription based content to desktop computers, though obviously these producers will need to license H264 to access the iDevice market."

Mozilla won't support closed formats and never will. There is no HTML5 video logjam. All browsers either support WebM now or will support WebM when the next version is released. Even Flash will support WebM. In the medium term H.264 is, frankly, irrelevant to the web.

The battle between closed video and open video has been fought and closed video lost. Unsurprisingly, this non-announcement from MPEG LA that they'll keep doing what they were already doing changes nothing.

Said this on 8-27-2010 At 08:50 pm
Hmm. Hadn't heard that Apple is going to support WebM in Safari and on their devices - do you have a link? And last I heard was that IE 9 would support WebM only if it's otherwise installed on the system. I'm not sure that's going to work for producers trying to reach locked down corporate, government and educational computers that can't otherwise download WebM. Have they changed that stance? Between the two, that's about 65% of the market that won't support WebM directly.

Any links about Microsoft changing their stance on this? I'd be interested in some facts if you have them.

Thanks for weighing in.

Jan
nada
Said this on 4-30-2011 At 04:55 pm

hi jan hope to be fine:)

welll i wanna to ask you two questions,,,,,

first one,,,,what is difference between container format like avi? and codec like windows media player?,,,but plz in most clearly wayyy cause i really getting confused from difference between both

second one, is streaming server provide the format of tv,i mean can i watching streaming with interlaced scanning?and if not how can i see iptv? can i see it by running codec in tv like windows media player?

i'll be pleased if u answer me thanks aloott:)

Jan
Said this on 5-2-2011 At 09:20 am
Nada:

Container format is file header information that details what player will play the file and things like that. This is different from codec which is a compression technology. So, you can encode the H.264 codec in MPG, F4V, MP4, MOV and many more container formats.

Most (if not all) IPTV is converted from interlaced to progressive during encoding phase.

Hope this helps.
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