Posted by Charles Hansen (M) on October 19, 2017 at 21:46:22
In Reply to: RE: Question for John Atkinson posted by John Atkinson on October 19, 2017 at 16:35:20:
If MQA is successful, audio will be distributed and rented in the same way that video is distributed and rented.
Look at what happened with video - they made it so that only giant mega-corporations could compete - Sony, Panasonic, Toshiba, Pioneer, Denon, because the up-front licensing fees for DVD were $150,000 with an annual renewal of $50,000, plus a 4% royalty on the entire unit. Four percent of a $200 DVD player was almost tolerable, but on a true high-end player, most of the money goes into the power supplies, the higher-quality parts, the elaborate analog and video circuitry, the clocks, the chassis - all things that have nothing to do with the patented technology that is being licensed. The royalty alone would cost as much as a high-quality chassis. It simply was unworkable for small, innovative manufacturers.
A handful of companies (Theta, Muse, Ayre) made "pirate" DVD players by purchasing a completely finished, fully-licensed and royalty-paid player at wholesale from Pioneer (or in one case Panasonic) and then "modifying" it to one degree or another. (As far as I know, Ayre was the only one of these companies to literally re-build the unit from the ground up. See link below.) The problem with that approach is that the Japanese giants "churn" their product line every year or two, and there is no stable platform to base a high-end player on. (This is what killed high-end CD transports in the early 2000's - nobody sold transports except Philips, and they changed models every year with no support - eg, replacement lasers - for previous models.)
This "pirate" practice reached its nadir when Lexicon (a division of Harman and sister company to Levinson at the time, and who had DVD licenses but not Blu-ray licenses) released its Blu-ray player. It sold for $3000 and it turned out that it was literally a $500 Oppo stuck inside another fancy box. They didn't even bother to take the parts out of the Oppo box - even the Oppo chassis went right in. The *only* thing that changed was the logo on the start-up splash screen.
This is one of the main reasons that people think the high end is a rip-off and a joke - in many cases it is.
Did the print magazines publish any of this?
If MQA succeeds, it will turn audio into the same exact thing. I've heard rumors that the MQA up-front licensing fee is $200,000 but that they will "waive" it for the "early adopters". The royalty rate is supposed to be a percentage of the cost of the product, but I've heard they are making special deals with the "early adopters" - only a buck-two-ninety-eight. What they probably want is a few percent of the wholesale cost of the product. If it goes mainstream, a few percent of all cell phone sales could add up to some *really* big bucks. Someone has to pay for Bob's mansion.
And that is the world that Bob lives in now. MQA is financed by the Rupert family of South Africa. Multi-billionaires that made fortunes by killing people with cigarettes. The elder Rupert (now deceased) invented the "king-size" cigarette, the "menthol" cigarette, and many other lovely things. One of the sons of big Daddy Rupert runs Reinet Investments, owners of both MQA and Meridian.
So if you want to see our "hobby" turned into a giant parasitic industry controlled by licensing organizations (like the video industry is - HDMI, Dolby, and DTS set all the standards and mandate changes every couple of years to create product "churn"), go ahead and support MQA and Bob Stuart and the greedy Rupert family of billionaires.
As I said, I would rather dig ditches.
