In Protest, Apple Will Delay QuickTime 6 Release

In a chess move to put pressure on the firm that announced licensing fees for MPEG-4 technology, Apple Computer Corp. said it was delaying the release of QuickTime Player 6 until more reasonable royalty terms are determined.

Apple previewed the latest version of its digital media software, which fully supports the MPEG-4 standard, at the QuickTime Live
conference in Los Angeles Tuesday afternoon, but the news that it is withholding QuickTime 6 until the recently proposed MPEG-4
licensing terms are readjusted overshadows the demonstration; Apple is one of MPEG-4 staunchest supporters.

A veritable firestorm ensued shortly after Denver-based MPEG LA, the dominant group of MPEG-4 patent holders, announced licensing
terms for MPEG-4 on Jan. 31. Those terms call for royalty rates to be paid per decoder and encoder, as expected. But the terms also
calls for a fee of 2 cents an hour, “based on playback/normal running time for every stream, download or other use of MPEG-4 video
data in connection with which a service provider or content owner receives remuneration as a result of offering/providing the video
for viewing or having the video viewed (including, without limitation, pay-per-view, subscription and
advertiser/underwriter-supported services).”

This is what has many content providers up in arms, because it wasn’t expected. Apple said that while it agrees with paying a
royalty for including MPEG-4 codecs in QuickTime, it “does not believe that MPEG-4 can be successful in the marketplace if content
owners must also pay royalties in order to deliver their content using MPEG-4.”

One industry expert with a personal interest in the licensing affairs is Douglas A. McIntyre, president and chief executive officer
of On2 Technologies, which designs its own streaming video compression codecs. McIntyre offered the use of On2’s open source VP3.2
codec in lieu of MPEG-4 in a letter to the Internet Streaming Media Alliance, which works on furthering interoperability for the

“The fees announced by MPEG-LA covering encoders, decoders, and usage will almost certainly curtail the adoption of a single
standard for video compression and distribution,” McIntyre said. “These fees, which will be passed from content owners and
infrastructure providers to the end user, unnecessarily restrict the use of streaming and downloaded video in the business and
consumer marketplaces.”

McIntyre told the MPEG-LA proposal to bill content providers based on streams was not expected from MPEG-4 backers
such as Apple, or cable providers.

“It’s like when you’re car shopping, and you hear that a car you had your eye on is going for $18,000. Then, when it finally comes
out, you find out it’s $29,000. Content providers were not anticipating this,” McIntyre said.

Withholding QuickTime 6, even for a short time, is a significant move for Apple. Last year, the company saw 80 million users
download QuickTime Player from the Internet.

In chummier news from Quicktime Live, Apple also previewed its new QuickTime Broadcaster
software, and announced a partnerhsip with Sun Microsystems Inc. and Ericsson to enable network operators to deliver standardized multimedia content to mobile phones and PDAs.

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