On royalties

[Updated 2004-02-10: a reader corrected me on ownership of MPEG-4 AAC, which bores a huge hole in my argument. Whoops. Removed aspersions on Apple.]

Another thing people forget about standards is the issue of royalties. Again, two fairly recent issues: WMA and MPEG4 AAC, and the whole débacle surrounding Rambus' role in SDRAM.

Just because something is a standard doesn't mean it's free to implement. The developers of the standard will often want compensation for having developed it. This applies even to ISO-mandated international standards.

Taking an example, consider the DVD and digital broadcast. Fairly ubiquitous, at least in the West, right? How much do you think you need to pay to make a DVD video, or broadcast a digital programme?

Digital broadcast and DVD both use the MPEG 2 video standard. Royalties apply to decoder hardware, encoder hardware and to recorded media. They're paid into a pool (the MPEG LA company administers this) which then pays out the the various developers. MP3's full name is MPEG 1 Layer 3 audio - and royalties are due to Fraunhofer IIS, who developed it.

AAC was developed by Dolby (licensing info); it was then standardised first in MPEG-2 (for bit rates higher than 32kbps per channel) and later in MPEG-4. I previously wrote in this paragraph that MPEG-4 was basically Apple's QuickTime 3; other sources make it clear that MPEG-4 only uses QuickTime 3's file format, not the audio encoding.

In these terms, it's understandable that Microsoft uses its own WMA format for their own Media Player software, rather than AAC. Once you realise this, it's down to terms and prices as to what gets licensed.