If VLC can ship a free DVD player, why can't Microsoft?

Microsoft announced this week that Windows 8 will not support playback of DVD movies unless you explicitly add software that supports that feature.

The economic reasons for doing so are compelling (see Microsoft's follow-up FAQ for details), but it’s also a potentially disruptive move for some Windows enthusiasts. So it’s not surprising that some of the initial reactions have been heated and even angry.

I look at the big numbers and walk through the math in a follow-up post; How much do DVD and digital media playback features really cost?

But I wanted to interrupt the discussion here to answer a question that several people have asked.

“Microsoft says the cost of DVD playback adds up to several dollars,” the argument goes. “But I can download the VLC player for Windows and get DVD playback for free. How come VLC can do it and Microsoft can’t?”

Welcome to the wonderful world of software licensing, where today we get to see a real-world example of the differences between commercial software and free software published under an open source license.

Any commercial product—hardware or software—that plays back DVDs has to have a license to a handful of software components that are protected by patents. In particular, you need access to the following:

• An MPEG-2 decoder. The licensing rights for the MPEG-2 standard are made up of a pool of patents contributed by their inventors. The pool itself is managed by MPEG LA, which collects and distributes royalties on behalf of the patent owners, under a master license agreement. Those rights cost $2 per device. The maker of a cheap DVD player sold at Costco pays $2 per unit for the MPEG-2 rights. Microsoft pays An OEM PC maker who licenses Windows from Microsoft must pay $2 in MPEG-2 licensing fees to enable DVD playback in every copy of Windows 7 Home Premium, Professional, and Ultimate. [Edited to clarify payment requirements]
• Dolby Digital audio support. This decoder, which is required for DVD movie playback, has to be licensed from Dolby Laboratories, Inc. The licensing schedule isn’t public, but in its annual report for 2011 Dolby revealed that it collected $124 million in licensing fees from Microsoft for the year, with most of that revenue generated from Windows 7. My back-of-the-envelope calculations suggest that Dolby gets at least 50 cents and as much as a dollar for every Windows PC sold.

Microsoft, Apple, Panasonic, Sony, Samsung, and other companies that make DVD players (hardware and software) have to pay those license fees for every unit they deliver to a customer, which is why you don’t see very many free DVD players.

The noteworthy exception is the VLC media player, which proudly bills itself as “a free and open source cross-platform multimedia player and framework.” It explicitly lists DVD as a supported format.

How can that be?

Well, on its “Legal concerns” page the makers of VLC open with a proud declaration: “VideoLAN is an organization based in France,” and “French law … is the only one to be applicable.”

If you skip to the bottom of the English portion of the page, you see why that matters. This is VideoLAN's argument:

Patents and codec licenses Neither French law nor European conventions recognize software as patentable (see French section below).

Therefore, software patents licenses do not apply on VideoLAN software.

The two software libraries that enable DVD and Blu-ray playback in VLC are libdvdcss and libaacs, both of which get their own legal justifications (the bold-faced words are in the original):

libdvdcss is a library that can find and guess keys from a DVD in order to decrypt it.

This method is authorized by a French law decision CE 10e et 9e sous­sect., 16 juillet 2008, n° 301843 on interoperability.

NB: In the USA, you should check out the US Copyright Office decision that allows circumvention in some cases.

VideoLAN is NOT a US-based organization and is therefore outside US juridiction. [sic]

[…]

libaacs is a research project and has an interoperability purpose (see above point).

Moreover, libaacs DOES NOT provide any decryption key. It is based on the official public AACS specification only.

Update: Via Twitter, VideoLAN notes that "libaacs is not yet shipped with VLC. We are waiting for remarks from the French DRM authority."  Their comments include a link to this article (English translation).

I’m sure if one were to ask a lawyer for one of the patent holders in the MPEG-2 or AACS pools, one would get a very spirited argument about the validity of those arguments. That argument would probably invoke the anti-circumvention provisions of the United States' Digital Millennium Copyright Act. But VLC can get away with it primarily because it is a nonprofit organization based outside the reach of the United States legal system and not worth pursuing.

A maker of commercial DVD playback hardware or software would be sued in a heartbeat if they tried to distribute products based on those freeware projects. They’d also run afoul of the General Public License if they tried to include the code in their closed-source, commercial products.

But the VLC project is hardly a rogue player. In fact, as I noted in a 2010 post, Microsoft has provided financial support for VLC:

Anyone can write a media player for Windows and can build in support for whatever media formats they want. No one is “required” to use Windows Media Player—exactly the opposite....

One alternative is VLC, which I have praised before.... In an e-mail to me, one of the core developers of VLC specifically praised Microsoft last year for its assistance, noting that “Microsoft … funded our Windows 7 compatibility program participation.”

Any OEM that includes a DVD player in a new Windows 8 PC will undoubtedly include a licensed DVD Player, such as the Metro version of PowerDVD that CyberLink announced at CES earlier this year. (If PowerDVD is smart, they'll include both the Metro and desktop versions with Windows 8.) You’ll also have an assortment of commercial programs to choose from.

The good news is that as a consumer you can count on the continued availability of VLC as a free DVD (and Blu-ray) playback alternative if you don’t want to pay for the Media Center Pack. And the project continues to evolve. Earlier this week, VideoLAN boasted via its official Twitter account: "by the time Windows 8 is out, we will have even better Blu-Ray support!"

See also:

• Microsoft: Media Center not part of 'the future of entertainment'
• A closer look at the costs (and fine print) of H.264 licenses
• H.264 patents: how much do they really cost?
• First legal shots fired at Google's VP8 codec
• Ogg versus the world: don't fall for open-source FUD