Hey MPEG-LA – How ‘Bout some transparency with H.264 internet royalties? We have alternatives!

As you may know, if you stream H.264 video from your website, you may owe the H.264 patent group royalties starting in 2011. I say “may” because the patent group hasn’t yet defined the royalty structure that will apply, apparently waiting for a self-imposed deadline of around December 2009. I detail what we do know in a soon to be released article in StreamingMedia.com, but the royalty could be hundreds of thousands of dollars for multinational corporations like Coca Cola or Disney.

In the meantime, plucky On2 is doing what they can to let producers know that they have alternatives. Specifically, here’s a bit from the press release that crossed my desk this AM (2/17/2009).

On2 Technologies, a leader in video compression solutions, announced today it has licensed its VP7 video codec to 21ViaNet (China), Inc.. Founded in 1996, 21ViaNet is the leading carrier-neutral IDC service provider in China.

The On2 VP7 video codec requires less data for high quality video, thereby reducing overall bandwidth costs without compromise to the end user viewing experience. As proprietary technology to On2, the video codec is patent pool free. This brings additional cost efficiency for publishing and distributing all kinds of content, as the video codec is not subject to MPEG-LA royalties.

If I’m a technology company seeking a streaming codec, adapting H.264 without knowing the royalty structure is strategically unsound, investing in a technology that may be ultimately too expensive to use, and handing your opponent significant negotiating leverage.

All this kind of begs the question; if you meet your own self-imposed deadline, are you procrastinating? If I tell the wife “I’ll clean the shed in December,” and do so, am I procrastinating? Of course I am. And even if the patent group meets their self-imposed deadline, and announces their royalty structure in December 2009, they are too.

After all, the only relevant information that will come to fore between now and then  is how the market adopts H.264. If we adapt it en mass, we hand the patent group the negotiating leverage to charge what they want, and reward their delaying tactics. On the other hand, if we join 21ViaNet and deploy VP7 or the soon to be released VP8, we send the message that a very good technology with a known cost structure beats a great technology saddled with unknown costs – every time.

Hey MPEG-LA, how bout some short term transparency on this one?

About Jan Ozer

I help companies train new technical hires in streaming media-related positions; I also help companies optimize their codec selections and encoding stacks, and evaluate new encoders and codecs.

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