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"A lot of feedback has been channelled the way of MPEG LA and they have listened to the industry, but fine details still need to be worked out," said Rob Koenen, president of the MPEG-4 Industry Forum (M4IF), which represents companies adopting the MPEG-4 standard.
"I think this is what the industry needed and I hope the dispute is over, but I am waiting to see industry reaction," Koenen said.
"MPEG-4 is kind of a complex standard to license because it works across many different applications, platforms and services. I see the licence as a product and this is version 1."
Koenen is most happy about the minimum threshold and cap on the usage fee that are part of the licensing scheme. "The threshold is important for small-time users and the cap for large users."
MPEG LA, a group of patent holders governing MPEG-4, stirred a debate after releasing a proposal for licensing terms in February.
Apple Computer delayed the release of its QuickTime 6, which uses MPEG-4 technology, because it disagreed with the proposal.
MPEG-4 is a digital compression standard for multimedia developed by the Moving Pictures Experts Group (MPEG). Many companies hold patents on parts of the standard. They are represented on licensing matters by MPEG LA.
Under the new terms, a provider of MPEG-4 video on the Internet or to mobile users that benefits commercially from the technology can choose to pay 25 cents per subscriber per year or two cents per hour of MPEG-4 video used, each subject to an annual cap of $1m. No royalty is payable for the first 50,000 subscribers to a service per year, according to an MPEG LA statement.
Software companies that make the MPEG-4 decoders and encoders, pay 25 cents per encoder and 25 cents per decoder sold, with a cap of $1m on each and no royalties on the first 50,000 encoders and decoders sold each year, MPEG LA said.
Other licensing options are in place for set-top boxes used by cable and satellite television companies, as well as for packaged media, such as CDs and video-on-demand offerings.
Large users have the option to pay the maximum fee and not have any royalty reporting obligations. Also, a parent company can pay a single licence to include all subsidiaries that are at least half-owned by the parent, MPEG LA said.
Licences will be available from September and parties that sign a licence agreement in the first six months will not have to pay royalties on products sold through to 31 December 2003, MPEG LA said in its statement.
MPEG-4, the successor to MPEG-2, will first be used on the Internet. It promises a much better picture at lower bit rates than are common today. MPEG-4 is also expected to be used in many devices, including TV set-top boxes and mobile phones. Apple and RealNetworks Inc. are among the biggest promoters of MPEG-4 use on the Web.