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Contrary to popular belief, most audio encoders are patented and require licenses or royalties from the patent owners. Most for-profit services using patented encoding formats are paying a significant licensing fee, which is hidden and built into the cost of the service.

Since the encoder is usually used by a service provider (company) to distribute content (the content being encoded is irrelevant to the patent), this is where the money can be obtained easily by the patent holder(s) - needing only a licensing contract with each service provider.

Decoders are usually free - the end user uses these and it would make not make business sense to try and obtain money from these numerous end-users (would need to manage and an account for each user).


Currently, the only royalty free *encoder* is OGG VORBIS. It is roughly comparable to other formats such as MP3, VQF, AAC, MVA and other digital audio formats. It is different from these other formats because it is completely free, open, and unpatented, whereas the others are not.

WAV files are probably not suitable since they are uncompressed (large) and would more processing and storage resources on Primus' servers.

MP3 is Patented and would require royalties from Primus (based on revenues) if ever such an encoder is used with TBB.

The MP3 patent is being seriously applied by Thomson et al.; strictly non-revenue applications (or under $100K US) are currently exempted by Thomson. To clarify the licensing requirements, an e-mail request was made to Thomson which provided a "confidential" response. The only information permitted to be divulged is the following:

A PC license is required when using MP3 encoded voicemail. See Royalty Rates for details.

As can be seen from the Royalty Rates, depending on the total number of "units" licensed, the "unit" cost would vary from $2.50 to $5.00. Any specific details (# of servers, contract length, minimum payments, etc.) are dealt with on a case-by-case basis with the service provider.

As with most licenses, "unit" refers to each "logical" instance of an encoder; much like multi-user licenses (per server) for most commercial software like Sun or MicroSoft. The service provider would know an approximate answer to what number of "units" are needed.

Assuming 100000 accounts with one "MP3 unit" per 3 to 25 accounts, this would mean about 10 cents to $1.67 per account per annum. This translates into a total licensing cost of perhaps a low of $10,000 to a high of $167,000 per year - not considering minimum contract requirements.

Put in context, this also assumes there are 100000 customers on a plan with VM (need to exclude the basic plan accounts). Thus, it may not make business sense to add MP3 at this point - including other reasons from the VM application provider (VocalData).

All of this is speculation, of course, based on a certain amount of hard data and a certain amount of educated guessing.

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by canoe See Profile
last modified: 2005-05-20 22:57:31