According to the licensing terms, owners of web site content will be able to licence the new video and audio compression format for $0.25 per subscriber, subject to an annual cap of $1,000,000. The fees will be applicable to web site operators that use the technology for commercial purposes, such as paid advertisements, pay-per-view services or subscriptions. There will be no royalty for operators with fewer that 50,000 subscribers.
The licensing terms will apply different models to different business environments. Cable and satellite providers will be charged on an onetime rate, and mobile phone operators will pay the same fee as internet providers.
Content owners will be given the option to pay $1 million annually in order to avoid reporting on usage. This term applies to a single legal entity, so that owners will not have to treat their on-line properties separately.
A spokesman for MPEG Requirements said that the technology needs to be adopted on the internet, since was created to be used in multiple markets. He added: “If the terms are acceptable for the markets, MGEP will take off big time. If not, it will be a serious impediment. MPEG-4 doesn’t exist in a vacuum. It has to be economically feasible, too.”