Ilana DeBare’s column “Mind Your Business” for The San Francisco Chronicle answers a wide range of small business questions. One Q&A from today caught our eye as it addresses a common misconception we hear all too often:
Q: I’d like to start a multimedia company and offer short films and products based on the characters in those films. I like Apple Computer’s QuickTime as a means of compressing and offering films for download. My brother says that I will have to pay royalties or licensing fees if I use QuickTime. If I want to distribute my films for free, do I have to pay royalties? How about if I sell them?
— Flummoxed filmmaker
A: QuickTime is a software platform for creating digital media such as videos and audio files. It relies on a number of different technologies, including one called MPEG-4. You don’t have to pay royalties to Apple for using QuickTime.
As for MPEG-4, I spoke with Allen Harkness, a licensing associate for the organization that represents its developers. He said that:
• If you are distributing videos for free that rely on MPEG-4, you don’t have to pay royalties.
• If you are selling videos that are 12 minutes or shorter, you don’t have to pay royalties.
• If you are selling videos that are longer than 12 minutes, you are legally required to pay Harkness’ group the lesser of 2 percent of sales or 2 cents per video.
(The cost structure is slightly different if you are selling videos by subscription rather than on a per-title basis — for instance, if you charge people an annual membership fee to visit your Web site and download your videos. But you don’t have to pay royalties until you have more than 100,000 subscribers.)
What does this mean for you? Basically, if you take off like wildfire and suddenly become the next Pixar, you’ll have to pay royalties. But as a new and very small producer, you’ll need to pay little or nothing. Say you sell 100 hourlong videos. At 2 cents per video, that would be a whopping $2.
I spoke with faculty at two Bay Area art schools, and none knew of anyone paying royalties for use of QuickTime. And Harkness said his group, which is called MPEG-LA, isn’t actively hunting down individual producers who owe $2 or $20 royalty checks. ‘Most of the companies signing up here are bigger players,’ said Harkness. ‘A lot of the very small users don’t sign up. We don’t spend a ton of time going after individuals. It’s not realistic, and it would be really difficult finding out who is doing it.’ Good luck with your venture. And when you’re ready to mail in your first royalty check, contact http://www.mpegla.com
Full article here.
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