[M4IF Discuss] Ad supported MPEG-4 Content & use fees

[Jordan Greenhall]

Sorry to return so late to the discussion.  I've been out of the country
(somewhat successfully) selling MPEG-4.
I've had the opportunity to meet with many content providers and network
operators and have discussed the proposed fees for the Visual layer.
All of them consider the proposed fees "ridiculous".  One of the key
things we need to rememeber is this - it doesn't matter if a reasonable
business model can be made around the proposed fees.  What matters is if
content providers endorse, support and adopt the standard.  There are
*free* options available out there.  And, of course, content providers
can simply choose to not adopt a new media altogether.  A good business
case can be made for MPEG-4, but license fees that make the content
providers laugh-out loud, don't help.
Primary Objections:
1. Too high.  These fees *might8 be in-line for a DVD-like product - if
they represent 100% of MPEG-4 fees for that product.  Additional systems
fees would push even this premium content out of the realm of reasonable
(from the content creator's perspective).  But DVD is pretty much the
high-end of premium content (in terms of revenue / unit).  For every
other kind of content monetization, the fee is increasingly burdensome.
2. Bizarre relationship to different kinds of content monetization.  A
flat rate per minute watched creates very different economic models for
DVD / VOD / SVOD / Pay Cable / Subscription Cable / Broadcast TV / Ad
VOD / Internet / Etc.  In some of these cases, the MPEG-4 license fee
actually pushes the content model outside of positive ROI.  One
interesting example.  Imagine a premium SVOD channel with first-run
movies that charges $20 per month and has 1,000,000 subscribers.  Then
imagine a lower-tier SVOD channel that carries comedy reruns that
charges $2 per month and has 1,000,000 subscribers.  Both would end up
paying the same MPEG-4 fee.  It is the value of the content that makes
the channels valuable.  Not the technology. 
3. Logistical nightmare.  Particularly for the very large content
providers.  They already have enough headaches tracking SAG fees, do
they really need to track and report MPEG-4 fees?  One interesting
proposal I've heard here is a cap on the delivery fee as well.  "One
Check" is something that might make sense.  Let us pay some fee and
figure out how we can make money against it.
4. Biased.  There is contention betweent the CE guys and the Content
guys.  The content companies don't like the fact that the MPEG-4 fees
favor device makers ($.25 per unit, cap) to the detriment of content
providers.  They see the MPEG-4 proposed fees as something proposed by a
bunch of CE guys who don't know the content business and think they can
transfer some wealth from content to CE.
Oh, and while we are talking about free competitors, don't forget that
these MPEG-4 patent royaltes are before any fees charged by the
technology providers themselves.  
J
-----Original Message-----
From: discuss-admin   lists.m4if.org [mailto:discuss-admin   lists.m4if.org]
On Behalf Of Rob Koenen
Sent: Tuesday, March 05, 2024 3:02 PM
To: 'AVARO Olivier FTRD/DIH/REN'; Rob Koenen; M4IF Discussion List
(E-mail)
Subject: RE: [M4IF Discuss] Ad supported MPEG-4 Content & use fees
Late response due to fortunate family circumstances.
> Hi Rob, all,
> Great example. Would be good to see shorter message with more 
> such figures :-) 
> and make a consolidated report out of that to make our case ... 
> Some comments : 
> 1- Value taken are for audio. Sould be different for video 
> (ex : easier to add adds on a video). Anyone got figures for 
> a complete movie clip ?

The values are largely the same
* perhaps you'd want a bit higher bitrate, but streaming is done
  at 44 kbit
* As I understand it, CPM doesn't significantly change between
  Audio and Video.
> 2- Example is probably not relevant for Systems. Since
> Systems may include more application oriented features (ex : 
> clickable items, games, ...), the revenue will be also different.

* What you are implying is that you are more likely to convert a 'view'
to a 'sale'. THis is the holy grail for Internet advertsing. What is
your conclusion then?
> 3- I guess the costs to deliver one song includes the Real
> Network license. In case of MPEG-4 products, since we have an 
> open standard, it is expected that the license will be 
> cheaper than with a closed solution. 

At least there will be competing products with price being one of the
competition points. The price of the license and its administration
needs to be factored in. 
> I think therefore we should revisit the conclusion.

What you have made clear is that there may be other and arguably more
attractive business models, but that shouldn't change the conlcusion of
this example.
Rob
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