Microsoft and Real Networks must be thrilled. This February, Apple immediately followed the unveiling of its QuickTime 6 media player and QuickTime Broadcaster with an announcement that these products were on hold indefinitely. At issue were the proposed licensing terms for MPEG-4 video, a key component of these products. These licensing terms, announced in February, require content providers to pay a royalty for every second of MPEG-4 video downloaded, streamed over a network, or distributed on pre-recorded media. In Apple's view, this "pay-per-view" fee structure is not a realistic match for the business realities of streaming video.
Apple's rejection of the proposed licensing terms is particularly notable because of Apple's long-standing involvement with the MPEG-4 standard. For example, the MPEG-4 file format is based on Apple's QuickTime file format. When one of MPEG-4's loudest cheerleaders balks at the licensing terms, it suggests that the process of bringing the standard to market has gone horribly awry.
Indeed, the controversial licensing terms are but one of the complications awaiting would-be MPEG-4 implementers. Despite the common perception that MPEG-4 is a single standard, it is more like a library of standards. The video standards alone describe nineteen "profiles," each with a unique combination of algorithms, resolutions, and so on. This complex scheme makes it difficult for system designers to assess the cost of implementing MPEG-4, particularly the licensing cost. The recently announced MPEG-4 video license, for example, covers only two profiles; implementing other profiles requires negotiating with up to nineteen patent holders.
Despite the uncertainty surrounding MPEG-4, it has already gained acceptance in many streaming media applications. However, as Apple VP Phil Schiller said in a recent interview, "This is a nascent industry; we're trying to kick it off, trying to get it started and we don't need to put roadblocks in the way for people -- [these royalties] would be a major roadblock." Indeed, one must wonder if the proposed MPEG-4 royalties will kill the streaming media goose before it lays a single golden egg.