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MPEG LA and WebM: Power to the Patent Trolls!--The Producer's View

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Late last week, the Department of Justice began investigating the MPEG Licensing Association (MPEG LA) to learn whether or not the group is unfairly trying to damage Google's competitive prospects with the WebM video format. But maybe MPEG LA would be doing us all a favor by damaging WebM. This commentary by Jan Ozer will appear in the April/May issue of Streaming Media magazine.

In February, MPEG LA issued a call for patents essential to the VP8 video codec. As you recall, VP8 was acquired by Google when it purchased On2. Then, Google open sourced the codec for use in the HTML video tag. Though most of the reaction to MPEG LA's move has been negative ("patent trolls!"), I wish them a hearty good luck.

Why? There are multiple reasons. First, I disagree with the concept that all technologies used on the web should be free. Why? Well, it starts with the fact that I worked for codec vendor Iterated Systems in the early '90s and saw firsthand how costly codec development can be. We had 18 Ph.D. mathematicians on board and consumed more than $300,000 per month in salaries. It's probably a stretch, but I'm guessing we wouldn't have gotten venture funding if we planned to give the product away.

Most "should be free" proponents point to protocols and specifications such as HTML, CSS, and TCP/IP and argue that the web couldn't have grown so explosively if charges applied. Again, I disagree. Before Iterated Systems, I worked at Hayes Microcomputer Products. In the early 1980s, there were multiple modem hardware/software interfaces, making software support a challenge. The market stabilized around the Hayes-compatible standard, and pretty soon, if you wanted to check CompuServe or MCI Mail or remotely log in to your company network, you needed a Hayes-compatible modem. Hayes made a small fortune on licensing fees from vendors selling Hayes-compatible modems, and these fees did nothing to slow the explosive growth of data communications.

Want another example? How about Ethernet, the standard we use for most wired connections and for which many companies are still paying derivative royalties. It hasn't slowed the networking market a bit. How about MPEG-2, which fueled digital broadcasts for many years, including both cable and satellite TV, as well as DVDs. MPEG-2 royalties certainly haven't slowed the growth of any of these markets, and neither did royalties on MP3 audio compression in audio-related markets, much to the great consternation of the music industry.

You can also argue that HTML and CSS aren't really free. Sure, both are open specifications controlled primarily by the World Wide Web Consortium (W3C), and any company can use them. But if you're a for-profit U.S. enterprise that wants to "provide strategic direction to the Consortium" and gain "participation in W3C Working Groups" (www.w3.org/Consortium/membership-benefits.html), you'll have to spend $68,500 per year in membership fees. If you want to be a playa, you got to be a paya (hey, I'm writing this just a couple of days after the Grammys). Not surprisingly, Adobe, Apple, Cisco, Google, Microsoft, Mozilla, and Opera (and 319 other organizations) are all members. So are HTML and CSS really free?

Finally, WebM isn't really free either, since-assuming the codec gains traction-Google essentially doubles the encoding and storage cost for all streaming producers. Another benefit (har, har) is the confusion in the marketplace à la competing standards such as Blu-ray and HD DVD. Love the HTML video tag or hate it, WebM makes it more complex to implement and vastly more confusing to explain.

If Google wanted to spend $100 million and really benefit the streaming media market, it should have approached MPEG LA for some kind of prepaid royalty buyout offer, as in, "We'll pay you $100 million to make H.264 usage free to all streaming producers in perpetuity." That would have solidified the market around the H.264 standard, cutting producers' costs and simplifying the whole HTML video tag concept.

So good luck MPEG LA. The streaming media marketplace will be more profitable, and will evolve more rapidly, if you can take WebM off the table and help solidify the market around a single codec.

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