The Internet Streaming Media Alliance (ISMA) signed off on the audio licensing program, set by Dolby Laboratories, Nokia, AT&T, Sony and Fraunhofer IIS. Licensees who use MPEG-4 audio encoders or decoders in consumer products would pay up to 50 cents for each "channel," or path, used to stream music. Those using the products for professional purposes would pay $2 per channel. Fees for PC-based software would be capped at $250,000 annually for encoders and $25,000 for decoders.
The MPEG-4 Advanced Audio Coding model follows alicensing plan for MPEG-4 video technology that some media companies say is too costly. MPEG LA, a licensing body representing 18 patent holders, proposed a plan early this year that would require licensees to pay 25 cents for MPEG-4 video encoders or decoders, with fees capped at $1 million a year for each licensee. It also proposes a per-minute fee equivalent to 2 cents for each hour of content encoded in the video format, including content on DVDs.
MPEG-4 is the successor of MPEG-1 and MPEG-2, technology that produced the MP3 (MPEG-1, Audio Layer 3) digital music explosion. Like its predecessors, MPEG-4 comprises audio and video technologies that condense large digital files into smaller ones that can be easily transferred via the Web.
MPEG-4 audio is up against serious competition from the entrenched MP3, Microsoft's Windows Media and RealNetworks' RealAudio formats, among others. It has received relatively little attention compared with MPEG-4 video, which has been endorsed in principle by Apple Computer and RealNetworks but faces strong resistance to its licensing terms.
Apple quicklythe MPEG LA licensing plan, previewing but refusing to release new QuickTime products that support the standard until a new deal is reached. In addition, ISMA asked MPEG LA to open the proposed licensing plan to industry review because of concerns that the royalty model will not foster the development of MPEG-4.
Both Apple and ISMA, however, say they support the MPEG-4 audio licenses.
"The license terms have the right profile for widespread adoption. Fundamentally, content creators and content providers can encode as much content as they like," said Frank Casanova, director of QuickTime product marketing at Apple. "This is the type of licensing we hoped the MPEG LA organization would have come out with on the MPEG-4 visual side."
ISMA President Tom Jacobs agreed, calling the audio terms "fair." He said it is impractical to expect content owners or distributors to adopt a format that involves use fees.
"The MPEG LA announcement was by comparison uncompetitive, or it put MPEG-4 at a disadvantage as compared with other options," Jacobs said. The MPEG-4 audio licensing plan "will reinforce the market acceptance and applications for this technology. People will want to go use it because of this licensing" plan.
Apple, Cisco Systems, IBM, Kasenna, Philips Electronics, Sun Microsystems and other tech companiesISMA two years ago. Market leaders RealNetworks and Microsoft have yet to sign on to the project.
ISMA and patent holders are wagering that the audio licensing plan will enable software developers, hardware vendors and content companies create a new generation of products and services based on MPEG-4. Dolby said the patent license agreement will be available in April. The San Francisco-based company is acting as the licensing administrator for patents held by AT&T, Dolby, Fraunhofer, Nokia and Sony.
"We felt it important to communicate the terms of an MPEG-4 (audio) program and provide some clarity over the issue of content fees because this has been quite a controversial aspect of the MPEG-4 visual licensing terms that were proposed," said Andrew Fischer, business development manager for electronic music distribution at Dolby Laboratories. "For those companies who are interested in deploying (MPEG-4 audio) products, now the licensing terms are understood."