UPDATE: Engadget just wrote a reply to this article. The article says that you don't need an extra license to shoot commercial video with h.264 cameras, but I wonder why the license says otherwise, and Engadget's "quotes" of user/filmmaker indemnification by MPEG-LA are anonymous...
UPDATE 2: Engadget's editor replied to me. So according to him, the quotes are not anonymous, but organization-wide on purpose. If that's the case, I guess this concludes that. And I can take them on their word from now on.
UPDATE 3: And regarding royalties (as opposed to just licensing), one more reply by Engadget's editor.
You see, there is something very important, that the vast majority of both consumers and video professionals don't know: ALL modern video cameras and camcorders that shoot in h.264 or mpeg2, come with a license agreement that says that you can only use that camera to shoot video for "personal use and non-commercial" purposes (go on, read your manuals). I was first made aware of such a restriction when someone mentioned that in a forum, about the Canon 7D dSLR. I thought it didn't apply to me, since I had bought the double-the-price, professional (or at least prosumer), Canon 5D Mark II. But looking at its license agreement last night (page 241), I found out that even my $3000 camera comes with such a basic license. So, I downloaded the manual for the Canon 1D Mark IV, a camera that costs $5000, and where Canon consistently used the word "professional" and "video" on the same sentence on their press release for that camera. Nope! Same restriction: you can only use your professional video dSLR camera (professional, according to Canon's press release), for non-professional reasons. And going even further, I found that even their truly professional video camcorder, the $8000 Canon XL-H1A that uses mpeg2, also comes with a similar restriction. You can only use your professional camera for non-commercial purposes. For any other purpose, you must get a license from MPEG-LA and pay them royalties for each copy sold. I personally find this utterly unacceptable.
And no, this is not just a Canon problem (which to me sounds like false advertising). Sony and Panasonic, and heck, even the Flip HD, have the exact same licensing restriction. Also, all video editors and official media players come with similarly restricted codec licenses! Apparently, MPEG-LA makes it difficult for camera manufacturers, or video editor software houses, to obtain a cheap-enough license that allows their users to use their codec any way they want! This way, MPEG-LA caches in not only from the manufacturers and software providers, but also artists, and even viewers (more on that later). Maximizing their profit, they are!
Recently, MPEG-LA extended their "free internet broadcasting AVC license" until 2015. So until then, users can use a licensed encoder (x264 doesn't count, in their view this makes both the video producer AND every random viewer of that video *liable*), to stream online royalty-free, as long as that video is free to stream. However, what's "free to stream"? According to one interpretation of the U.S. law (disclaimer: I'm no lawyer), if you stream your video with ads (e.g. Youtube, Vimeo), then that's a non-free usage. It's commercial video, even if you, the producer, makes no dime out of it (and that's a definition and interpretation of the US law that even Creative Commons believes so, if I am to judge from their last year's "what's a commercial video" survey). MPEG-LA never made a distinction in their newly renewed license between "free streaming on your own personal ad-free homepage", and "streaming via youtube/vimeo". For all we know, they can still go against Youtube/Vimeo for not paying them [extra] royalties (to what, I assume, they already pay) for EVERY video viewed via their service, or go against the video producer himself.
And then there's the other thing too: Both Youtube and Vimeo use the open source x264 encoder to encode their videos, as far as I know. Youtube's version is a highly modified x264 version (forked, I believe), and Vimeo's is a much more vanilla version (since their company has fewer C/C++ engineers than Youtube). Vimeo is probably in even worse situation because they offer their in-house encoded x264 MP4 videos for free download too, prompting users to download these x264-created videos, and break their license agreement with MPEG-LA for using unlicensed videos with their [licensed] decoder installed on their PC! Since we know for a fact that x264 is breaking the MPEG-LA license agreements (because their devs didn't license it with MPEG-LA), can this make Vimeo, myself the video producer, AND every of these millions of viewers, liable, in the eyes of MPEG-LA?Is this kind of licensing even enforceable? Possibly no. Am I panicking for nothing? Quite possibly, yes. But I still don't like the language of the license and the restrictions it opposes.
In my opinion, while the current MPEG-LA execs still seem to have some small common sense, there's nothing protecting us from changing their current somewhat-common-sense execs in 5 or 10 years time, with some bat-shit crazy ones. Their license agreement is so broad, that ALLOWS for crazy lawsuits against 99.999% of the population (most people have watched a Youtube video, you see, even if themselves might not even own a PC).
Think about it.
They have created such broad license agreements, with such a stronghold around the whole chain of production (from shooting to delivering), that they could make liable the whole EU/US population, and beyond. This is major. This is one of these things where the DoJ should get involved. This is one of the situations that can destroy art. I'm a video producer myself (I direct rock music videos for local bands without compensation, and I also shoot Creative Commons nature videos), and I much prefer to never hold a camera in my hands ever again than to pay these leeches a dime. If MPEG-LA enforces all that they CAN enforce via their various EULAs, then fewer and fewer people will want to record anything of note to share with others.
And that's how an artistic culture can ROT. By creating the circumstances where making art, in a way that doesn't get in your way, is illegal. Only big corporations would be able to even grab a camera and shoot. And if only big corporations can shoot video that they can share (for free or for money), then we end up with what Creative Commons' founder, Larry Lessig, keeps saying: a READ-ONLY CULTURE.
Humans are intellectual species. We can't go further, advance our own species, go to the next level, without art. We need every member of the society to be free to express him/herself via any modern means of art that can REACH OTHERS. Art is only effective when it can reach other people. And MPEG-LA makes it not only difficult to do so, but it could bankrupt you.
This is why I said that this a DoJ/governmental issue. It's not only anti-trust, monopolistic and whatever other economical buzzword you want to use, but it's also something very dangerous for our society as a whole.
As I explained above, the problem CAN NOT be fixed by simply exporting your footage using OGV Theora, because by the time you decided you want to charge for your video, or upload it on a free streaming site with ads, or you used a non-licensed *decoder* to edit it, you're already liable. In fact, you've already made your decision which route to take by the moment you pressed that "REC" button on your camera! Theora (and any other Free codec) only helps you in one small part of the licensing minefield that MPEG-LA has setup in the last 20 years. It doesn't protect you in the whole chain of creation-editing-exporting-sharing, which is how MPEG-LA has locked us in for good.
MPEG-LA has insinuated in the past that they own so many patents around mpeg2 and h.264, that is simply not possible to build a video codec that it doesn't infringe on their patents. Guess what. I do believe that this is pretty true. I don't believe that any modern codec is actually patent-free. It's not possible, since their patents seem to be as broad as their licensing agreements. For some algorithms, there is only a single way of doing it right, and that method was probably already patented in the '90s by MPEG-LA. So if one day they decide to go against Theora, BBC's Dirac, or VP8, it's possible that they do have a case. I'm not a lawyer of course, but it is my opinion that they would find a way to do damage in court!
Now, there is only one way out of this whole MPEG-LA mess:
1. Use a camera that does not use any of MPEG-LA's codecs.
2. Use a codec that all, of most of its patents, have expired, patents that *PREDATE* MPEG-LA's.
3. After editing, export back to that codec. Don't use any of the supposedly modern patent-free codecs, because you can still be liable if MPEG-LA sues these codecs and wins.
So, which codec you should use to record your video and share with the world?
The solution is MJPEG.
Let me make one thing clear. MJPEG **sucks** as a codec. It's very old and inefficient. OGV Theora looks like alien technology compared to it. But (all, if not most of) its patents have expired. And JPEG is old enough to predate MPEG-LA. Thankfully, there are still some MJPEG HD cameras in the market, although they are getting fewer and fewer: Nikon's dSLRs, Pentax's new dSLRs, and the previous generation of Panasonic's HD digicams. Other cameras that might be more acceptable to use codec-wise are the Panasonic HVX-200 (DVCPro HD codec, $6000), the SILICON IMAGING SI-2K (using the intermediate format Cineform to record, costs $12,000), and the RED One (using the R3D intermediate format, costs $16,000+). Almost every other HD camera in the market is unsuitable, if you want to be in the clear 100% (and that's already monopolistic in my view).
Another way to get mpeg-free video is to record via HDMI, directly to the desktop PC (and bypass the SD/CF card). However, this is NOT an 100%-proof way of going around MPEG-LA, because some cameras still use their codecs to do some processing (since HDMI-output is still not "true" RAW).
And this brings to an end my little thought process which started last night and has consumed me ever since. Apple and Microsoft supporting the behemoth called MPEG-LA makes me sick to my stomach. They should both be ashamed of themselves. Instead, they should all be lobbying to get them out of the way completely -- and not via just picking a different codec, but completely invalidating most of their patents. Put lobbying to the government to good use, for once.
FREE OUR CULTURE. We already have Creative Commons, and a Free codec in our disposal. But without FREE CAMERA CODECS, we're going nowhere fast. Because it all starts with the camera. Not how you export at the very end.