Ogg Vorbis is an open source audio codec which is used for compressing and decompressing audio files. It is an alternative to MP3 media codecs patented by Fraunhofer IIS, AT&T-Bell Labs, Thomson-Brandt, CCETT, and others. Ogg Theora is the open source alternative to H.264 administered by MPEG LA.

In 2001, now director of the Xiph.org Foundation, worked for Green Witch, an online company that competed with Music Match. Fraunhofer, one of the MP3 patent holders with Thompson, bought a stake in Music Match and charged Green Witch $60m to license MP3 for the year. Green Witch couldn’t pay and was sold to a company that owned another web radio provider, iCAST. Ogg Vorbis was created to escape the MP3 noose and avoid a repeat of history.

There are several software application providers who use Ogg Theora as its video codec. Opera 10.5 which offers HTML5 video is one of them. The popularity of this codec is increasing since license fee for MP3 is controlled by a group of companies and for several businesses, an open source version makes a better business sense.

If you want MP3, you have to pay Thompson, which helped create MP3 along with three other companies. Decoding costs $0.75 for a patent and software license per unit, but if you want to encode the media – which, of course, you have to – then that’s priced at up to $5.00 per unit.