After industry adopts open video standards, MPEG founder says the end is nigh

Leonardo Chiariglione is founder and chairman of the International Standards Organization's Motion Picture Expert Group (MPEG), whose standards have dominated video playback since the earliest days; MPEG's primary rival is the Alliance for Open Media, an ascendant open standards body that requires that members promise not to enforce patents that overlap with its standards, meaning that anyone can play back AOM video without paying rent to MPEG members.

The triumph of open standards has manifestly demoralized Chiariglione, who grudgingly admits that a combination of rent-seeking by MPEG members and legal threats from patent trolls has spelled the end of the "business model" of creating standards for the purpose of allowing companies to charge royalties for everyday technological activities by injecting their patents into it.

Chiariglione says that this also spells the end of real R&D for video, because without the potential for a huge patent-payday, no one will invest in making video playback better.

In this regard, Chiariglione totally ignores the history of other open formats and systems, which are often better than their proprietary counterparts, for two reasons:

1. Companies that use the standard can pay to improve it to suit their needs, rather than paying rent to a patent-holder — when they do, the improvements they fund redound, for free, to everyone who uses the standard later.

2. Companies that use video are often in the video-using business, not the patent-rent-seeking business: the BBC and Disney and Google and Apple all need better video, and none of them are primarily in the format-licensing business. It doesn't really matter to their bottom lines if they're spending $X/year in rent to patent-owners, or $X a year in grants to universities or funds for their own R&D to improve the standard.

The subtext to the whole argument is shot through with contradictions: Chiariglione makes it clear that the rents accruing to patent-holders are extremely profitable, vastly outstripping their investments in MPEG; at the same time, he insists that co-operative efforts could never muster the capital to match those investments, to say nothing of the benefits from cooperative, rather than competitive, development efforts.

Right now, MPEG members are investing $X to earn $X * 10 or 100 or 1000 in payments from video users. In the age of networked collaboration, Chiariglione literally can't conceive that the pool of users might be able to muster $X from among themselves, even though this might represent a savings of 90% or more in their total video format spending.

Chiariglione makes a bunch of Kubler-Ross-style bargaining proposals, suggesting ways that MPEG could tinker around at the margins to try to forestall the inevitable triumph of open formats, but in the end admits that ISO's own bureaucracy makes even these modest changes very unlikely.

My concerns are at a different level and have to do with the way industry at large will be able to access innovation. AOM will certainly give much needed stability to the video codec market but this will come at the cost of reduced if not entirely halted technical progress. There will simply be no incentive for a company to develop new video compression technologies, at very significant cost because of the sophistication of the field, knowing that its assets will be thankfully – and nothing more – accepted and used by AOM in their video codecs.

Companies will slash their investments in video compression technologies. Thousands of jobs will go and millions of USD of funding to universities will be cut. A successful "access technology at no cost" model will spread to other fields.

So don't expect that in the future you will see the progress in video compression technology that we have seen in the past 30 years.

A crisis, the causes and a solution [Leonardo Chiariglione]