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Final VC-1 patent licensing terms set by MPEG group

Erik Hanson

Following up on some comments made in this week's podcast about licensing terms, the MPEG Licensing Administrator group has announced the final patent terms for manufacturers wishing to product equipment or content using the VC-1 video standard. By combining the patent portfolios covering VC-1 into one blanket license, the MPEG group has helped businesses license essential products using one license, which is then split up to the entities that contribute patents to the pool.

Details after the break

The VC-1 licensing standard, which was developed in large part by Microsoft, and is used in both HD DVD and Blu-ray standards, is expected to be released later this year as a final portfolio fee. To summarize, manufacturers of products that decode or encode VC-1 (standalone Blu-ray and HD DVD players) must pay between ten and twenty cents per unit depending on number of units sold, up to USD $5M per year. Products in personal computers pay the same, but with an $8M cap. For the content creators, there is a fee of two cents per title or 2%, whichever is lower, up to $4.25M per year ($5M in 2010). If there is ever a company that decides to go the subscription route, the fee is between $25,000 and $100,000 per year, depending on the number of subscribers. For all these categories, if you produce relatively few products, the fees are waived, and content fees are waived completely before September 1st of 2006, so get cranking if you want to make some license-free content for your blue-laser media.

It's interesting to see all the various fees and licensing agreements that come into play when producing products or services of any kind, and for a major manufacturer like Samsung or Toshiba, these numbers can be easily passed onto us consumers. But as I mentioned in the podcast, once you start adding up all the fees for all the different patents in one product -- just think about all the logos you see on an average consumer electronics box, and pretty much every brand name and standard supported, and you'll start to see what we mean -- it's not hard to see where a $500 product becomes a $1000 one, just so the manufacturers can make a little profit.

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