Please note: This is not a statement on
behalf of Xiph.Org or Mozilla. I speak here for myself, my team, and other
developers who share my views on an open web.
If you haven't seen today's announcements
from Cisco
and Mozilla regarding H.264, you'll want to read them
before continuing.
Let's state the obvious with respect to VP8 vs H.264: We lost, and
we're admitting defeat. Cisco is providing a path for orderly retreat
that leaves supporters of an open web in a strong enough position to
face the next battle, so we're taking it.
By endorsing Cisco's plan, there's no getting around the fact that
we've caved on our principles. That said, principles can't replace
being in a practical position to make a difference in the future. With
Cisco making H.264 available at no cost, holding out against H.264 in
WebRTC makes even less sense than holding out after Google shipped
H.264 in the video tag. At least under these terms, H.264 will be
available at no cost to Mozilla and to any other piece of software
that uses the downloadable plugin.

Cisco's license hack is obvious enough if you have the money:
There's a yearly cap on total payments for any given licensed H.264
product. This year the cap is $6.5M. Any company that pays the cap each year can
distribute as many copies as they want. There are still terms and
restrictions on how the distribution gets done, but Cisco will be
handling that (and only Cisco will be allowed to build and distribute
these copies without a separate license).
Once you or your applications download the prebuilt codec blob from
Cisco, you're allowed to use that specific blob for anything you want
so long as you don't modify it or give it to anyone else. H.264 codecs
for everyone! Cisco has committed to these blobs being available for
just about every platform and architecture you can think of. "IBM
S/360? Yes, please!"
This arrangement has obvious short-term benefits. Open source
projects get licensed (if partial and restricted) access to H.264, and
users don't feel like they're being held hostage in the ongoing battle
between the open web and closed codecs. Firefox and other projects
can install H.264 support (via Cisco), which is a big deal.
That said, today's arrangement is at best a stopgap, and it doesn't
change much on the ground. How many people don't already have H.264
codecs on their machines, legit or otherwise? Enthusiasts and
professionals alike have long paid little attention to licensing.
Even most businesses today don't know and don't care if the codecs
they use are properly licensed[1]. The entire
codec market has been operating under a kind of 'Don't Ask, Don't
Tell' policy for the past 15 years and I doubt the MPEG LA minds. It's
helped H.264 become ubiquitous, and the LA can still enforce the brass
tacks of the license when it's to their competitive advantage (or
rather, anti-competitive advantage; they're a legally protected
monopoly after all).
The mere presence of a negotiated license divides the Web into
camps of differing privilege. Today's agreement is actually a good
example; x264 (and every other open source implementation of an
encumbered codec) are cut out. They're not included in this agreement,
and there's no way they could be. As it is, giving away just this
single, officially-blessed H.264 blob is going to cost Cisco $65M
over the next decade[2]. Is it any wonder video
is struggling to become a first-class feature of the Web? Licensing
caused this problem, and more licensing is not a solution.
The giveaway also solves nothing long-term. H.264 is already
considered 'on the way out' by MPEG, and today's announcement doesn't
address any licensing issues surrounding the next generation of video
codecs. We've merely kicked the can down the road and set a dangerous
precedent for next time around. And there will be a next time
around.
So, we're focusing on being ready.
Fully free and open codecs are in a better position today than
before Google opened VP8 in 2010. Last year we completed
standardization of Opus, our popular state-of-the-art audio codec
(which also happens to be the best audio codec in the world at the
moment). Now, Xiph.Org and Mozilla are building Daala, a
next-generation solution for video.
Like Opus, Daala is a novel approach to codec design. It aims not
to be competitive, but to win outright. Also like Opus, it will carry
no royalties and no usage restrictions; anyone will be permitted to
use the Daala codec for anything without securing a license, just like
the Web itself and every other core technology on the Internet.
That's a real solution that can make everyone happy.

I can't resist a little codec fantasy football.
MPEG HEVC licensing isn't set yet. It will be interesting to watch
the negotiations if Cisco's H.264 giveaway plan is wildly successful.
In the future, could nearly every legal copy of HEVC come as a binary
blob from one Internet source under one cap? I doubt that possibility
is something the MPEG LA has considered, and they may consider it now
that someone is actually trying to pull it off with H.264. Perhaps in
five years, even cameras and televisions will download a software
codec to avoid paying monopoly rents. Sillier things have happened
given sufficient profit motive.
Or maybe they'll build in a free, legally uncomplicated copy of
Daala instead. Dare to dream.
—Monty Montgomery <monty@xiph.org> and others
October 30, 2013