The recent support of H.264 codec by the Adobe Flash Player 9 update 3 made me wonder about licensing costs involved in publishing H.264 video on Internet. I’m not a legal expert, but from what I’ve understood you don’t have to pay anything if your viewers are not paying a subscription or a title-by-title fee. In other words, if your content is for free, the royalties are for free till 2010. After this term the license will expire and you might have to pay as for free television, starting from $2,500 per year.
This is just my interpretation of the documentation that I have found till now, but you might want to go in depth: a private organization known as MPEG LA, which is not affiliated in any way with the MPEG standardization organization, administers the licenses for patents applying to H.264 standard. They published a summary of AVC/H.264 LICENSE TERMS, where you can find these explanations:
“In the case of Internet broadcast (AVC video that is delivered via the Worldwide Internet to an end user for which the End User does not pay remuneration for the right to receive or view, i.e., neither title-by-title nor subscription), there will be no royalty during the first term of the License (ending December 31, 2010), and after the first term the royalty shall be no more than the economic equivalent of royalties payable during the same time for free television.
In the case of the (b) sublicenses for video content or service providers, the maximum annual royalty (“cap”) for an enterprise (commonly controlled legal entities) is $3.5 million per year in 2006-07, $4.25 million per year in 2008-09 and $5 million per year in 2010.“
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