licensing bodies and costs
A reader (thanks, Randy) points out that licensing is complex.
- AAC isn't licenced by MPEGLA, it's licenced by Via Licensing (aka Dolby).
- MP3 is licensable from Thompson, not MPEG.
- For portable devices MP3 is $.75 per unit.
- For AAC, if your annual volume is less than 400,000 per year (100K per quarter), $1.00 per unit. If your unit volume is between 400,000 and 2 Mil units per year (200,000 to 500,000 per quarter), it is about the same $.74/unit. Above two Million units a year, AAC gets cheaper.
15 Comments:
What's the licensing model and cost for WMA?
So... that "relatively pricey" equals CHEAPER if you have any reason to be producing a device in the first place (400,000+ per year) or 25% more per license but .125% more of a typical $200 dollar device or substantially cheaper if you can sell more than two million (but Microsoft can't achieve that volume so we won't even mention those rates)?
Yeah, you've got more editting to do on your previous post.
Obviously, this could get very messy... there are maximum fees in some cases, etc...Multi-channels... interim/final products, etc... but the rate you cite for AAC is for a hardware codec (encoding and decoding). Most of the devices we are discussing do not need encoding... So the rates are actually $.50 (for 1 to 100,000) to $.37 (for 100,001 to 500,000) down to $.12 (for 10,000,001+)... In fact, the Via link I am looking at differs from your reported values for codecs (the tiering).
http://www.vialicensing.com/Licensing/MPEG4_fees.cfm?product=MPEG-4AAC
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You know what I think companies should do? Follow what Archos has done and offer the codecs as part of a plugin package which they can decide to buy or not. This way, people who don't want such codecs don't have to pay extra, and those that do can.
Aaarghm, sorry, ignore the last two posts. There is no onetime payment for hardware support for mp3, only software. And the mp3 codec for hardware (not software) is $1.25 (not $5.00) but still more than AAC in any case.
See link: http://mp3licensing.com/royalty/hardware.html
I apologoize for any confusion.
David, you can leave my contradictory posts up, but can you edit the fact that you are using hardware decoder rates for mp3 (not codec) but using codec rates for AAC (not decoder) ASAP. Right now, your post is highly inaccurate.
The true rates are (as far as my research tells me):
1 to 100,000 - $0.50
100,001 to 500,000 - $0.37
500,001 to 1,000,000 - $0.27
1,000,001 to 5,000,000 - $0.22
5,000,001 to 10,000,000 - $0.17
10,000,001 or more - $0.12
This is substantially different than you are projecting.
the via site you mentioned is per channel, so you must multiply by 2x for stereo, 5x for surround, etc.
so if you simply assume stereo, you get exactly the numbers in my original post - $1, 0.74, etc...
Okay, accepted. But why do our tiers not jibe?
In the absense of Randy chiming in, I'd assume the Via site is right on tiering.
So AAC is cheaper once you hit 100,000 units.
Even you guys can do that. (Sorry, that was cheap: for Samsung, Creative, Toshiba, and anyone that makes up say 95% of the remaining 25% of the market, this is achievable, making AAC cheaper than mp3).
I still suggest that you need to edit your previous post about "relatively pricey", unless "relatively pricey" means cheaper than the "universal" format "licensable for a low fee."
of course, mp3 licensing is mitigated by the fact that the license is usually provided by purchasing the IC/DSP components. And at this level in the marketplace, rates are unpublished but do carry volume discounts. However, as you say, via "published" rates... aac gets cheaper than mp3 at volumes easily achieved by Apple, Samsung, Creative, Zune, Toshiba, Archos, and Sony... probably Cowon, Coby and others...
Duh, the Via tiers are per quarter which is what you have.
I think the point remains however: for any decent producer, the rates are cheaper than mp3.
Sorry about that.
Stillanonymous - remember that per quarter also means the tally resets each quarter (see Via FAQ). Following the published rates, you can assume that many PMP products will pay the lower amount in the ramp up to xmas, and higher amount in the slow season. to match MP3, you have to sell 100K min each and every quarter - a tall, tall order for smaller companies
Also - I goofed in my email to David. The second tier was 400K per year or 100K per quarter. I mistakenly wrote 200k per quarter. That higher math of 400/4 messed me up.
Bottom line - licensing is complex even when using the published rates. The answer to the question of what is cheaper AAC or MP3 depends 100% on the specific company involved (volume, special deals, cross licenses, you name it). That is why lawyers get the big bucks. Sony - for example - is one of the patent holders covered by Via Licensing. So presumably their Net cost is reduced from list royalty by whatever share of AAC royalties they collect - maybe even more than that. Maybe it is so cheap for Sony, they might as well stick it in every product. So, again, expensive/cheap - all depends on who you are...
thanks, randy. I appreciate your comments.
I still think even with resets the top 5, if not more, easily hit the 2nd tier in all quarters.
"Bottom line - licensing is complex even when using the published rates. The answer to the question of what is cheaper AAC or MP3 depends 100% on the specific company involved (volume, special deals, cross licenses, you name it)."
Agreed. But I would say, bottomline: AAC is not negligibly more expensive than mp3 at all.
David's comments about expensive are just FUD.
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