MPEG-LA announced a
revision of its scheme for royalties on patents related to implementations
of the OMA DRM 1.0 standard. The patent-pooling organization, whose DRM
patent contributors include ContentGuard and InterTrust, did this in response to
public
criticism over its original pricing scheme from the mobile industry over the
past couple of months.
The previous royalty scheme called for fees of US $1 per mobile device plus
one percent of the revenue from every content transaction. In contrast,
the new scheme reduces the device fee to $0.65 and calls for fees of $0.25 per
year for each subscriber to mobile content services that use OMA DRM 1.0.
The latter fee would be assessed when the subscriber first purchases content
using the service. Furthermore, the fees would be retroactive only to the
beginning of this year rather than to whenever they launched.
This new scheme achieves at least some of the objectives that we
suggested in
last week's DRM Watch when we noted that it is in the mobile industry's own best
interests to negotiate a workable royalty scheme with MPEG-LA. MPEG-LA has
acknowledged that the mobile content industry is in fledgling stage and that
excessive patent licensing fees would put a damper on its growth.
Yet the royalty scheme does not go far enough in giving wireless carriers and
other service providers incentive to experiment with new content services.
The per-subscriber fee may be easier to administer than a revenue percentage,
but it is only cheaper for wireless carriers once their users purchase $25 (or
about €19/£13 in Europe, where most of the relevant services are) worth of
content; in other words, it effectively penalizes carriers for those consumers
who try the service and decide they don't like it.
On the other hand, OMA DRM 1.0 limits -- by design -- the kinds of business
models that mobile content providers can offer. The latest version of the
OMA DRM standard, 2.0, provides much more flexibility. MPEG-LA has said
that once it is finished creating its OMA DRM 2.0 patent pool, it will not ask
for additional fees from those who have already taken its license through
implementation of OMA DRM 1.0. This should encourage wireless service
providers to move to the newer, richer standard, which in turn should benefit
consumers.
We will continue to report on this story as it unfolds, because its outcome
will set so many important precedents for content markets of the future.
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