"We think that the whole MPEG-4 licensing thing is unhealthy for the industry, and having an end-to-end Open Source solution quite frankly is a very nice flanking maneuver against MPEG-4," says Doug McIntyre, president and CEO of On2. "They're going out and saying they want to charge more than anybody else does because this is going to be a standard, and our counter-play to that is, 'Here's ... a video codec that's better than MPEG-4, an audio codec that we think is better, and in addition to that, there's no fee."

McIntyre says the lack of a "truly integrated multimedia system" is one weakness of the Open Source software catalog now. "This puts the Open Source community in a position where that's no longer the gaping hole in the way that Open Source software operates."

McIntyre sees another weakness in Open Source projects that are controlled by for-profit companies. "I think Open Source initiatives that are operated by corporations like ours are probably somewhat suspect, just because people look at them and say, 'All they want to do is take the ideas they get and put it into their proprietary technology.' It's what I would describe as potentially fair paranoia."

To avoid that paranoia, On2 is turning the project, codenamed Theora, over to the non-profit Xiph.org Foundation. McIntyre sees Ogg Vorbcis as the "audio equivalent" of On2's VP3. Combining those two with VpVision, the TrueCast 5 server and its video player, will eventually yield an Open Source multimedia system that "works off the shelf."

Emmett Plant, CEO of the Xiph.org Foundation, says there's about a year of work ahead before all the elements are combined into a working product, but On2's support will pay lead Vorbis developer Christopher "Monty" Montgomery's rent. "We're getting to do something a lot of people wish they could do -- get paid to work on Open Source software," Plant says. "No, we're not going to focus on just one project because that's where we're getting paid now, but it does make things easier." Editor: Plant is a former columnist for NewsForge and former employee of OSDN, which owns NewsForge and Linux.com.

Much of the hacking needed is on the Ogg multimedia framework, which has needed to be done for a long time, Plant says. "This gives us a very good excuse to go in and do that. When we can put together the total package, it'll be very easy to be able to move to any computing platform you want that has a monitor on it."

While Xiph.org will control the project, McIntyre and Plant both say On2 's engineers will continue to be involved, and if there's ever some kind of disagreement, all the code will remain Open Source. "It's not as though they're just handing the code and running away," Plant says. "I think they're going to give a lot of good help to give us moving forward. The great thing is it's not just good help to us, but it's good help to everybody."

Plant says the VP3 project will positively impact the Ogg Tarkin video codec project, which is largely "theoretical" at this point. The work done on the Ogg multimedia framework for this Theora project will help build a foundation for Tarkin, he says.

All On2's donated software, including the now LGPLed VP3, will be moved to the Ogg Vorbis BSD-style license. Although VP3 is a patented technology, the negotiations between Xiph.org and On2 have resulted in the patent's teeth being removed, Plant says.

So what's in it for On2? As other proprietary companies have done, On2 is hoping that the Open Source project will create a standard that builds interest in its proprietary products, like VP5 and TrueCast 7.

"From my standpoint, we have lots of major corporations that may not use Open Source software," McIntyre says. "They may want to use the proprietary versions of our software. I find that one of the best ways for them to get comfortable with On2 as a software development company is to download the Open Source stuff and use it. It's the ability to test drive the principles behind how all of our software works."

McIntyre says there's all kinds of potential impacts, including on gaming for Linux. Ogg Vorbis is already being used in a couple of PC games, including Unreal Tournament and Serious Sam, but Plant hesitates to make any sweeping predictions.

"That's one thing that we learned with Vorbis, that it won't always be used for the kind of stuff we think it's going to be used for," Plant says. "Once you've got an open code base, you find it used in a lot of strange and different ways. We're looking at a situation where I can't really tell you where the mass adoption is going to come because experience tells me I have no idea."

McIntyre also sees a negative impact on Microsoft's multimedia products. "Microsoft has had a policy of giving away its Windows Media Player, server and codecs in a market where other people like Real charge for them," he says. "If there's another very, very good system that's got all the elements to it and that's free, I don't know if that's great news for Microsoft.

"As you know, Ballmer and these guys run around and turn red and virtually have strokes every day when people say there's some other competitive Open Source initiative."