Companies fear costly MPEG-4 licenses

A newly proposed MPEG-4 licensing plan is sending jitters through multimedia circles, raising cost concerns about a new standard that promises to bring powerful interactive features to digital video.

Some MPEG-4 backers praised the licensing plan for removing lingering uncertainty over the costs of implementing the new format, but others said a proposed per-minute streaming fee, equivalent to 2 cents an hour, makes the plan all but unworkable.

“I don’t think (the fees) are commercially viable,” said Douglas McIntyre, chief executive of On2 Technologies, a video-compression provider. “To come out with very high usage fees undercuts the whole concept of having a standard.”

The reaction comes in response to a long-awaited blueprint unveiled last week by MPEG LA, a licensing body representing 18 patent holders with claims on underlying MPEG-4 technology. The plan aims to resolve myriad patent claims tied to MPEG-4, which is being pushed as a new standard for online video.

Although last week’s deal promises to dramatically simplify licensing issues related to MPEG-4, its terms have raised eyebrows.

Under the plan, licensees would pay 25 cents each for MPEG-4 products such as decoders and encoders, with fees capped at $1 million a year for each licensee. It also suggests charging a per-minute rate, with no cap.