Making your film available for download? It could cost you.

After reading this Engadget article I wondered if an independent filmmaker using would have pay MPEG-LA if they chose to stream their film in H.264 format from their own website for a fee. H.264 is the format used by Blu-ray players , YouTube and iTunes, web software such as the Adobe Flash Player and Microsoft Silverlight. In other words it’s quite pervasive.

BTBO: If an independent filmmaker would like to make his/her film available for download or streaming from his/her own website at a cost using the  H.264 codec would s/he have to pay a royalty to MPEG-LA?

In short, the answer I got was yes. In long:

Thank you for your message and for your interest in MPEG LA.  We
appreciate hearing from you and will be happy to assist you.

As you are aware, MPEG LA offers our AVC Patent Portfolio License which
provides coverage under patents that are essential for use of the
AVC/H.264 Standard (MPEG-4 Part 10).  Under the AVC License, coverage is
provided for end products and video services that include AVC/H.264
functionality.  Accordingly, the party offering such end products and
services to end users (e.g., under the party’s own brand name) concludes
the AVC License and is responsible for paying the applicable royalties
associated with the branded products/video service they offer.

Therefore, if a party offers AVC/H.264 video content to End Users for
remuneration, then the party offering such AVC Video will need to be
licensed and may be responsible for paying the applicable royalty
associated with the AVC Video they distribute.

For example, when AVC video is offered on a Subscription basis, such
video would constitute Subscription AVC Video.  Under the AVC License,
there is no royalty for services with less than 100,000 Subscribers in a
Calendar Year.  After the first 100,000 Subscribers, the royalty begins
at $25,000 per Calendar Year and rises to $100,000 for services with
more than 1,000,000 Subscribers in a Calendar Year.

When AVC Video is offered on a pay-per-view basis, it would constitute
Title-by-Title AVC Video.  Under the AVC License, the royalty for
Title-by-Title AVC Video is 2% of the remuneration paid to the Licensee
or $0.02 per Title, whichever is lower.  These royalties apply only for
Titles that are longer than 12 minutes in duration and there is no
royalty for Titles that are 12 minutes or less in duration.

In the case where AVC Video is offered to End Users through the Internet
free-of-charge, such content would constitute Internet Broadcast AVC
Video.  During the current Term and next Term of the AVC License (which
run through December 31, 2010 and December 31, 2015, respectively),
there is no royalty for Internet Broadcast AVC Video.

So pay-per-view it’s 2 cents or 2%, whichever is lower. If you do a subscription model, it’s nothing if you have less than 100k subscribers. Something to keep in mind, not so much the amount you have to pay but that you have to pay, of which you may have been unaware.

UPDATE:

As of August 26, MPEG-LA announced that the aforementioned expiration dates for free H.264 streaming being free no longer apply, it will be free forever.