[M4IF Discuss] Slashdot discussion of Salon article

[Craig Birkmaier]

>Tom McMahon wrote:
>
>>  With the work of the JVT, MPEG-4 is going to do QUITE well in the video
>  > CODEC area.

And Sanjay Kulkarni replied:
>Yes, I think everyone is in agreement with that, but IMHO MPEGLA is trying
>to get the technology advantages of the MPEG2/MP3 domain (along with its
>business model) and trying to apply them to a whole new market (of Internet
>Streaming) that has historically been dominated by "free" or "open-source
>business model.
>
>I see this "per-stream-per-minute" charge justifiable for wireless mobile
>industry (for e.g. I pay for every minute I watch a video on my cellphone)
>but I still don't accept a per-minute charge for Internet streaming,
>especially when I have other options.

One can correctly claim that MPEG-4 visual surpasses MPEG-2 in coding 
quality.efficiency. And one can rightly claim that most of the 
interest in MPEG-4 - outside of those who understand the implications 
of the entire MPEG-4 coding model - has been centered on the video 
coding capabilities. Tom's comment only re-enforces this perception. 
MPEG-LA is focused on this reality. And the JVT is focused on this 
reality.
The proposed usage fee is for the same kind of linear video streaming 
that is supported by MPEG-2. OK, maybe new applications and markets, 
but the focus is just on linear video streams. Linear video streams 
account for hundreds of billions in TV revenues worldwide each year - 
those who control these revenues rightly are interested in protecting 
them.
It is perhaps ironic that when I started writing about video 
compression  1990, the major concerns were about quality. The battle 
cry of video professionals was that they would not allow the pristine 
quality of their product to be decimated by video compression. When 
it became obvious that compression was for real, that it might 
actually work, the focus was on minimum bit rate required for 
transparency. MPEG-2 could do the job, but only if given adequate 
headroom.
By the time the second generation of MPEG-2 encoders were hitting the 
market, however, the focus had shifted, from quality to quantity. 
Rather than how many bits to I need for transparency, the focus 
became how few bits do I need to keep consumers from complaining. 
This was re-enforced by the reality that people were watching crappy 
"postage stamp" video via a 56K modem...millions of people.
Rather than SDTV being threatened by HDTV, the battleground became 
the fertile ground between streaming video and TV.
MPEG-4 video does not threaten MPEG-2 because the quality might be 
better. It is a threat because it challenges the traditional business 
models that support the massive business of delivering linear video 
programing to brain dead receivers/consumers. A 10% reduction in 
bandwidth for a given level of quality is enough to get program 
distributors excited.
The ability to move from linear streaming to an advanced system for 
delivering digital media content, content that can be customized, 
localized, optimized for many devices, and navigated by the consumer 
is threatening to those who control and seek to protect the old 
business model.
But that is just the beginning of the story. The handwriting is on 
the wall. Control of content and control of distribution are the 
profit centers of the future.
The business of carriage is mundane and highly competitive - it's a 
steady business, but don't look for huge profit margins here.
The business of selling hardware is mundane and highly competitive - 
huge volumes, razor thin margins. The home VCR was a disappointment; 
tiny margins on machines and blank tape. The major CE vendors watched 
others get rich off of packaged media.
The money is in content and access to content. The CE industry has 
learned a thing or two about revenues  AFTER the box is sold. Video 
games are a prime example - a huge chunk of Sony's profits come from 
the royalties on the sale of PS2 games. DVD was a breakthru product. 
MPEG-LA and the DVD Consortium figured out how to cash in on the box 
(traditional royalties), AND by creating ongoing revenue streams via 
royalties on the IP. Every DVD movie includes a usage fee. A small 
but humble start.
Damian Cave came close to hitting the nail on the head in the Salon 
article. Unfortunatley he was not as aggressive as he could have been 
in pointing out the real issues that are in play here.
The proposed usage fees are about control over an emerging medium. 
Several times this week I heard people ask how we have reached the 
point where it has become possible for the developers of a 
technology to place a tax on content.
These things can happen when powerful industries act in concert to 
protect a highly profitable legacy.
Internet streaming is NOT  "a whole new market" as Sanjay suggests.
It is a whole new business model.
The "whole" of MPEG-4 is to this new business model what linear 
video/MPEG-2 is to the old dumb TV business model.
Focusing on another linear video codec - JVT - misses the point.
The effort that will be required to migrate to the new business model 
supported by MPEG-4 will be massive. For the technology to be a 
success, every penny in royalties on the IP should be plowed back 
into promotion of the standard. Something tells me that this is not 
what MPEG-LA has in mind.
-- 
Regards
Craig Birkmaier
Pcube Labs