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For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Thursday, April 05, 2007

About audio codecs (Updated)

In the wake of Apple's decision to provide DRM-free versions of AAC song files via iTunes, there's been a lot of renewed interest in audio codecs, their costs, and how they're licensed. Not surprisingly, my go-to guy for this kind of information, Dave Caulton, has been documenting this stuff on his Zunester blog. I'd like to summarize that information, and some other related details, here.

First, the codecs. With due respect to the Ogg crowd, there are really only three codecs that matter today: MP3 (or as I call it, The One True Format), WMA (Windows Media Audio), and AAC (Advanced Audio Codec). Microsoft, of course, created and licenses WMA. Apple utilizes (but did not create) AAC.

Contrary to popular belief, MP3 is not free, but because it is so pervasive (or as Dave notes, what we might call the JPEG of audio formats), all audio devices and software can work with this format. WMA is supported by far more device and software types than AAC, due to its very low licensing costs (see below), but AAC is arguably more pervasive now from a numbers standpoint, due to the success of the iPod and iTunes, both of which are AAC-compatible.

Regarding licensing costs, WMA is the least expensive of the three, though that's become increasingly irrelevant. The licensing fee for WMA is just 10 cents per unit, but there is a maximum cost of just $400,000. Thrifty.

MP3 is in the middle, from a cost perspective. The MP3 licensing cost for portable devices is 75 cents per device.

AAC is the most expensive, at least for low-volume licensees, which explains why you see so few AAC-compatible devices. The cost structure is tiered as followed: For devices that sell less than 400,000 units per year, the cost is $1.00 per unit. At 400,001 to 2 million units, the cost is 74 cents per unit. Over 2 million units, the cost is less expensive. (Anyone have a number?)

Update: A reader ("yawn" by name) provided this link to Via's AAC licensing fees. Not surprisingly, it's tiered and confusing. (As opposed to tired and confusing, I guess.)

Licensing cost comparison:

250,000 units
WMA: $25,000
MP3: $187,500
AAC: $250,000

500,000 units
WMA: $50,000
MP3: $375,000
AAC: $370,000

1,000,000 units
WMA: $100,000
MP3: $750,000
AAC: $740,000

But wait, there's more: Dave also notes that MP3 actually comes with a content distribution fee as well, which is sort of amazing (in a bad way):
The Thompson site says you pay 2% of revenues from a service - or $0.02/song - to use mp3 in a service. The last time I saw a content distribution fee, it was on mpeg-4 part 2, and it pretty much killed that standard. Thankfully, in h.264 mpeg dropped that requirement for free distribution.
From a quality perspective, both AAC and WMA offer dramatic compression benefits over MP3. However, because of MP3's pervasiveness and the low cost of storage, this has never really translated into much of an issue for users. AAC and WMA offer roughly equivalent quality at the same bit-rates.

Windows Media DRM is the most widely licensed DRM scheme, from a number of licensees perspective. Apple does not license its FairPlay DRM scheme, but since the iPod and iTunes are so popular, it is arguably the most widely-used DRM scheme today (from a digital file format perspective). Comparing DRM licensing fees is thus pointless, as you couldn't license FairPlay if you wanted to. (There's been one exception, of course: Motorola's RAZR iTunes-compatible phones.)

Finally, Apple's decision to offer 256 Kbps AAC files via iTunes does not mean that all DRM-free songs sold in the coming years and months will be in AAC format. Other services will be able to offer these songs in other formats, including DRM-free MP3 and WMA, and no doubt will. So while I applaud Apple for offering DRM-free songs, I will likely look elsewhere for this music, not because of quality issues (256 Kbps AAC is excellent) but because of compatibility issues: As a Media Center user, especially, and someone who wants to keep my options open going forward, I will always seek out MP3 when possible. When it's not possible, I purchase from high-quality services, burn to CD, and re-rip back to the PC in MP3 format. I will now be able to do this with Apple's 256 Kbps AAC songs. It's not possible with the current 128 Kbps files, because of the resulting unacceptable loss in quality that occurs during the conversion process.

Update: A number of readers point out that iTunes can actually convert AAC files to MP3 (and vice versa). What it does is use the format you set up in the application's Import format settings. This is obviously better than burning and re-ripping, so if this works with Apple's DRM-less AAC files, well, bravo: I'll be all over that.

So I'm expecting some pushback. Invariably, people get agitated by the fine points of any discussion like this. I'm interested in keeping this accurate, but I'm not interested in your religious beliefs (aka "but AAC is a million times more efficient than WMA"). If you have a valuable and accurate correction to make, I'm listening.

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[ Posted at 10:20 AM | Permalink ]


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