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As MPEG4/H.264 becomes a consideration for anyone broadcasting over the internet, the charges involved in using the codec is set to become a real issue. Now, I've spent some time researching this and the picture is as clear as a misty day up a mountain, as is the MPEG4 Licensing Authority's website.

Microsoft's VC1 codec is totally free (at the moment) as is On2's VP6 codec used in Flash video (you can find a highly partisan comparison of VP6 and H.264 here).

However, MPEG 4 was developed by a consortium and all want their piece of flesh. But the audio and the video bits are licensed separately

The basic cost for anyone running a commercial internet TV service seems to be 2% of revenues or 2c per stream for sites with more than 10,000 unique viewers over the course of a year (yeah, go figure...).

This is a ridiculous burden on ad driven sites that may show a 3 min clip, an ad and then a three minute clip. That's 6c; at $40CPM the broadcaster is receiving 4c before all other costs; although there does seem to be huge ambiguity around the actual rules.

There's some useful information here on the Microsoft website.

The reality is that both MPEG LA and Microsoft have tried to bring in encoding and decoding prices in the past and have failed. This kind of technology simply does not lend itself to charging either the publisher or the viewer; the charging has to be included in the cost of the technology, if at all. Let's face it, if Tim Berners-Lee had wanted a licence fee we probably wouldn't have the internet as we know it today. Big Technology should learn when to be greedy and when to be sensible, or let MPEG4 end up in the same dump as Betamax and HD-DVD.