Licensing model for MPEG-4 released

The key license for use of the MPEG-4 digital compression standard is now available, MPEG LA LLC, a group of MPEG-4 patent holders said this week.

The release ends a dispute around licensing for MPEG-4 that earlier this year led Apple Computer Inc. to delay the release of its QuickTime 6, which uses MPEG-4 technology. MPEG LA stirred a debate after releasing a proposal for licensing terms in February. The terms were updated in July, to the satisfaction of MPEG-4 users.

The final MPEG-4 Visual Patent Portfolio License, which sets fees for use of MPEG-4 encoders and decoders on devices including PCs, mobile phones and in consumer electronics, is based on the July update and should please the industry.

"There is no excuse anymore not to use MPEG-4," said Sebastian Moeritz, chief executive officer of Dicas Digital Image Coding GmbH, a maker of video coding technology based in Berlin, and a board member of the MPEG-4 Industry Forum (M4IF), which represents companies adopting the MPEG-4 standard.

Most important in the licensing terms are caps to provide cost predictability and user-threshold levels to minimize impact on lower volume manufacturers and encourage early stage adoption, said Moeritz.

MPEG-4 is a digital compression standard for multimedia developed by the Moving Pictures Experts Group (MPEG). Many companies hold patents on parts of the standard. They are represented on licensing matters by MPEG LA in Denver.

Under the licensing terms, a provider of MPEG-4 video on the Internet or to mobile users that benefits commercially from the technology can choose to pay US$0.25 per subscriber per year or US$0.02 per hour of MPEG-4 video used, each subject to an annual cap of $1 million. No royalty is payable for the first 50,000 subscribers to a service per year, according to a presentation on the MPEG LA Web site.

Software companies, which make the MPEG-4 decoders and encoders, pay US$0.25 per encoder and US$0.25 per decoder sold, with a cap of US$1 million on each and no royalties on the first 50,000 encoders and decoders sold per year, according to the MPEG LA presentation.

Other licensing options are in place for set-top boxes used by cable and satellite television companies, as well as for packaged media, such as CDs and video-on-demand offerings.

Large users have the option to pay the maximum fee and not have any royalty reporting obligations. Also, a parent company can pay a single license to include all subsidiaries that are at least 50 percent owned by the parent, according to MPEG LA.

MPEG-4, the successor to MPEG-2, will first be used on the Internet. It promises a much better picture at lower bit rates than are common today. MPEG-4 is also expected to be used in many devices, including TV set-top boxes and mobile phones. Apple and RealNetworks Inc. are among the biggest promoters of MPEG-4 use on the Web.