But even if Apple and the other ISMA members are sincere in their threat to go elsewhere if the use fee isn't nixed, will open-source alternatives measure up?

There are plenty of naysayers. "Open-source advocates consistently underestimate the difficulty, by orders of magnitude, of pulling off a complex, powerful standard like MPEG-4," says Ben Waggoner, a multimedia consultant. "The most viable competitor is Microsoft's Windows Media."

Legal problems could also hinder open-source development. MPEG-LA holds dozens of broad patents on audiovisual compression and when Dell Computer tried to include a DVD drive in its computers without first getting an MPEG-2 license last year, seven patent holders sued. Open-source companies could receive similar treatment.

"These members have the right to protect their intellectual property so to the extent that other technologies use similar algorithms, lawsuits will occur," says Shawn Ambwani, vice president of business development for Envivio, creators of an MPEG-4 media player. "The reason this hasn't happened is because there's no one to go after. But if there's money involved, I can guarantee that the patent holders will go after them -- independent of MPEG-LA."

Content creators also may not fear MPEG-4's terms as intensely as some critics expect. Jeff Handy, senior digital media specialist at Bisk Education, which offers online degree programs for several universities, says that he expects his company to go with MPEG-4 regardless of the cost. The main motivation: interoperability. By letting students download lectures to a variety of devices, MPEG-4 offers an advantage over all the other options, open source included.

And for Bisk, the use fee "is not a complete show stopper," Handy says. The company serves 65,000 students with about six hours of video material apiece, so the total cost of the use fee would be about $7,800 or 13 cents per student -- barely a fraction of the total $3 cost that Bisk spends on each student.

Bisk's experience may be an exception. An October 2001 J.P. Morgan analysis of RealNetworks' business model shows that an hour of encoded audio pays out about $.02 in profit -- meaning that the MPEG-4 fee would devour the incentive to use the product. Other estimates, cited by McIntyre and ISMA, show that the MPEG-4 use fee would double streaming costs for many providers.

MPEG-LA, faced with such figures, has a number of options that could thwart any turn to open-source alternatives, however. Primarily, it could decide to jigger the fee structure to gain back support. The group could place a cap on the use fee, as it did with the per-copy fee, or it could allow anyone who earns, say, less than $100,000 to use MPEG-4 for free. MPEG-LA could also cut the cost of the use fee. The companies behind MPEG-2 -- which covers DVD players and set-top boxes -- chose such options after its release, and the MPEG-4 crowd, which includes many but not all of the same companies, might be willing to do it again.

"At the end of the day, MPEG-LA is in the business of marketing a license," says Larry Horn, vice president of licensing and business development MPEG-LA. "If this technology goes totally unused, the patent holders lose out. We have an incentive to get it right."

But even if the published licensing terms -- due to be released by this summer -- contain concessions to critics, open-source advocates remain confident in their ability to affect the market.

Plant, Xiph's CEO, figures that it's only a matter of time before Apple and other MPEG-4 critics realize that corporate solutions can never be as affordable as open-source alternatives.

"[MPEG-LA] may not have come to the price out of avarice but rather because that's what it costs to pay its people," he says. "That may be the best they could do, and they may not change. I can write 5,000 letters to Sony and my PlayStation 2 costs won't go down."

The solution, he says, is not to call for cutting costs. The multimedia industry should stop trying to figure out a fair price for an unproven open standard. Instead, he says, they should ask themselves a more obvious question: Why pay for something that you might be able to get for free?

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