A one-stop shop for Blu-ray licensing

Now that Blu-ray has won the high-definition disc format war, the industry is moving on to the next step: recruiting companies to produce players and media.

And to help that process along, MPEG LA, the standards and licensing group, is floating the concept of a creating an organization that will be able to license all of the patents necessary to make Blu-ray products.

The idea was discussed back in early 2007 during a meeting of 18 of the holders of necessary Blu-ray patents. With the format war over, MPEG LA is once again talking up the concept. The mechanisms and rates for Blu-ray licenses have yet to be fully hammered out, industry sources say.

While Blu-ray backers talked up customer convenience and experience, royalties were at the heart of the Blu-ray push. A successful standard can result in millions of royalties every year for patent holders. The licensing fees for making an individual DVD player totaled $15 to $20 a few years ago. (For those of you who believe manufacturers should only adopt free and open standards, please feel free to spend 10 years of your life inventing a complex optical storage and retrieval standard.)

Philips and Sony garnered millions in revenue from CD licensing.

If one-stop shopping becomes a reality for Blu-ray, it would prevent one of the major headaches of the DVD world from repeating. To make a DVD player or disc, manufacturers have had to ink deals with three separate organizations, which represented various patent holders. There is DVD 6c (Hitachi, Panasonic, JVC, and six others), DVD 3c (Philips, Sony, Pioneer), and MPEG LA (representing encoders and decoders). To make a DVD player, manufacturers have to pay $4 to DVD 6c per player, $2.50 to MPEG LA, and I'm not sure about the amount to DVD 3c.

For DVD movies, DVD 6c charges about 4 cents per disc and MPEG LA charges 3 cents. I wrote an article last month on the subject but low-balled the royalties required.