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I'm not an MPEG-LA booster by any means (was involved with VP8) but for the sake of clarity, they can't and don't charge arbitrary royalties. The agreement for

I'm not an MPEG-LA booster by any means (was involved with VP8) but for the sake of clarity, they can't and don't charge arbitrary royalties. The agreement for being involved in H.264 was to provide a license under "RAND" terms, meaning Reasonable And Non-Discriminatory. What that means in practice is that you cannot charge Apple $1 per copy and Google $10 just because you hate Google. You have to have terms that apply to everyone equally, and they have to be 'reasonable', which presumably 100% of your gross revenue would not be. That said, I do believe the patent holders have the right to circumvent the pool and cross-license directly from each other. I'm not too clear on how that relates to the RAND policy, but my cynical guess would be that it can be used as cover for some pretty sweet deals.

ZeroGravitas 16y ago
While RAND terms are generally better than having Microsoft or Apple able to pull the rug out from under you at any time, they are very specific in what they mean by "reasonable" and "non-discriminatory". The most obvious example of this is that it's not "reasonable" to charge usage royalties on FLOSS software. There is a school of thought that flat-rate royalties don't clash as badly since you don't need to track usage, but since we're talking about standards produced for the public good, obviously royalty-free would be better. Either way, by assuming and enforcing a business model from the hardware days, it is "discriminating" against certain busineses. Similarly, they've dropped charges on free web video, which is a clear attempt to break into a market they've had trouble in before. So as a class of users at least they can charge you more if they think they can get away with it. Finally, it appears that the (highly successful) video game industry thinks that royalties designed for the TV industry aren't particularly reasonable for them and so avoids MPEG audio and video formats whenever possible. So while they perhaps made sense 20, or even 10, years ago, RAND terms are no longer RAND.

ZeroGravitas 16y ago

While RAND terms are generally better than having Microsoft or Apple able to pull the rug out from under you at any time, they are very specific in what they mean by "reasonable" and "non-discriminatory". The most obvious example of this is that it's not "reasonable" to charge usage royalties on FLOSS software. There is a school of thought that flat-rate royalties don't clash as badly since you don't need to track usage, but since we're talking about standards produced for the public good, obviously royalty-free would be better. Either way, by assuming and enforcing a business model from the hardware days, it is "discriminating" against certain busineses. Similarly, they've dropped charges on free web video, which is a clear attempt to break into a market they've had trouble in before. So as a class of users at least they can charge you more if they think they can get away with it. Finally, it appears that the (highly successful) video game industry thinks that royalties designed for the TV industry aren't particularly reasonable for them and so avoids MPEG audio and video formats whenever possible. So while they perhaps made sense 20, or even 10, years ago, RAND terms are no longer RAND.