I think that this is a very important point. The only reason you need to license something is if the law prevents you from acting without a licence. However, i

I think that this is a very important point. The only reason you need to license something is if the law prevents you from acting without a licence. However, if you are processing the video in any way, or shipping software that does, then you will need a patent licence, won't you? In this case, the license terms could impose appropriate terms (eg. "we will license the patent to you in return for $x for every file you send over the web"). Licensing an encoder might also come with extra terms in the EULA (eg. "if you give us $x we will let you use our h.264 encoding software but you must also agree to pay MPEG-LA $y under these extra terms"). So essentially the whole system can be enforced purely via contract law, non-withstanding the dubiousness of the validity of some EULAs. This suggests to me that a Rapidshare-type site would not need a licence even though people can use it to send h.264 video over the web. However a Youtube-type site would, because they are doing h.264 processing themselves - and a licence could come attached with additional terms.