Some in the press and blogosphere position the Alliance for Open Media (AOMedia) and Google as virtuous do-gooders who want web video to be free, in stark contrast to the “evil” Sisvel pools, who want to impose a “toll on the streaming video road“. However, leaving aside for the moment the infringement on third parties patents topic, even a casual examination of this assertion reveals that Google in particular plans to make a ton of money from products and services using AV1, and that money ultimately comes from consumers.
First, a quick analogy. Suppose you’re staying at a premium hotel with a fancy fitness center that includes towels and all the cold water you can drink. Are the towels and water free, or are they included in the price of the hotel room? Is the hotel being virtuous in caring for your health and fitness, or just simplifying their payment structure and value proposition?
Returning to AOM and Google, as you may know, Google offers the Android operating system to all OEMs for free. Is this more evidence of virtuous behavior by Google, their earnest attempt to create smartphones for the masses who don’t like or can’t afford iOS? Well, consider that in 2016, a lawyer for Oracle asserted in a court case that Google had earned over $22 billion in profit from Android, primarily in the form of advertising and their share of sales in Google Play, which produced $24.8 billion in revenue in 2018. Google may not be charging separately for Android but they sure are making a ton of money from it.
What about YouTube, another “free” service? According to Google’s Q4 2019 earnings report, YouTube generated $4.7 billion in advertising revenue for that quarter, a run rate approaching $20 billion annually. Who pays for advertising? The consumers that purchase the products or services advertised, of course. An even more straightforward example of the toll on consumers is Amazon, whose streaming services are charged with a membership fee.
Now, consider that Google started including AV1 to Android Q and started streaming AV1 in YouTube in 2018. Do you still think that they’re being virtuous for not charging separately for AV1? Do you still think that consumers that buy the goods advertised on Google and YouTube aren’t paying for AV1?
To be clear, no one should begrudge Google or other AOMedia members for monetizing their IP any way they see fit. However, not every business can use this model, and no one should begrudge Sisvel pool members for seeking a royalty on their respective IP that Google and AOMedia included in VP9 and AV1, in particular since the Sisvel pool members didn’t design VP9 or AV1 and, therefore, they couldn’t influence the choices to use of their patented technologies. The owner of the IP gets to choose how to monetize it; not the company or consortium that appropriated it, including it in its designs.
Google and AOMedia aren’t giving VP9 and AV1 away, they’re simply not charging separately for it. But that certainly doesn’t mean they’re not making money from it or that consumers aren’t ultimately paying for it.