So it’s no surprise that the company announced an open-source, royalty-free HTML5 video format based on VP8 at its I/O conference Wednesday. What is surprising is the level of industry support Google has already rounded up.

Dubbed WebM, the format uses the VP8 codec for video and Vorbis codec for audio and is offered under a pretty permissive BSD-style license that makes it quite a bit more attractive than H.264, a rival format with pretty steep licensing fees.

Google is pushing the format hard. The company has convinced Mozilla and Opera to add WebM support to their browsers (Chrome support is obviously a given) and it has begun encoding all YouTube videos 720p or larger in the format.

Google has also lined up some 40 software and hardware vendors to support WebM. Among them: Oracle (ORCL), AMD (AMD), ARM (ARM), Nvidia (NVDA), Qualcomm (QCOM) and Brightcove. Also on the list: Adobe (ADBE), which plans to use VP8 for Flash.

An impressive lineup of supporters, though there are three notable omissions: Apple (AAPL), Microsoft (MSFT) and Intel (INTC). Will those companies come around and back the standard as well? Given enough industry support for VP8 playback through HTML5, they may have to. I’ve asked them and will update here if I hear back.

UPDATE: Intel tells me it will support WebM and V8, not because it particularly favors them but because it plans to support most video formats.

“We’re supportive of multiple formats,” a company spokesman told me. “We don’t support one format to the exclusion of another format.”

UPDATE: Interesting. There’s speculation that WebM may violate some H.264 patents. “VP8 is simply way too similar to H.264,” developer Jason Garrett-Glaser concludes after an exhaustive analysis of the format. “[A] pithy, if slightly inaccurate, description of VP8 would be “H.264 Baseline Profile with a better entropy coder”. Though I am not a lawyer, I simply cannot believe that they will be able to get away with this, especially in today’s overly litigious day and age. Even VC-1 differed more from H.264 than VP8 does, and even VC-1 didn’t manage to escape the clutches of software patents. Until we get some hard evidence that VP8 is safe, I would be extremely cautious. Since Google is not indemnifying users of VP8 from patent lawsuits, this is even more of a potential problem.”

Nielsen SoundScan says the drop was either one percent or .09 percent, depending on how you count, so this isn’t the bottom falling out. But it does look like a peak, and it has been in the works for some time.

Earlier this year, Warner Music Group (WMG) pointed out that it was seeing its digital sales slow and argued that one reason was because the industry had raised prices on most of its songs at Apple’s (AAPL) iTunes store in 2009.

That thinking is now pervasive across the industry, Billboard notes: “While consumers will still buy hit songs for $1.29, it seems that catalog tracks priced at that level are not selling as well as they were at 99 cents.”

But you could also make the case that digital tracks were going to decline anyway and that the industry is better off squeezing every penny it can.

And if you want to try to find a silver lining here, you could argue that since song sales are slipping, there’s no reason for the industry not to support rental/subscription models like Spotify, Rhapsody and MOG by cutting their licensing fees. But I wouldn’t bet on that happening soon.

Great news for the open-source community and for the long-suffering Novell (NOVL), which has been battling SCO for quite some time now.

“Novell is very pleased with the jury’s decision confirming Novell’s ownership of the Unix copyrights, which SCO had asserted to own in its attack on Linux,” the company said in a statement. “Novell remains committed to promoting Linux, including by defending Linux on the intellectual property front.”

Which is great, because SCO, while obviously struck low by today’s verdict, evidently intends to forge on with its suit against IBM (IBM), which it also claims misappropriated Unix and built it into Linux. Former U.S. District Judge Edward Cahn, the trustee for SCO’s bankruptcy, told the Salt Lake Tribune that the jury decision will not dissuade it from pursuing its lawsuit against Big Blue. Said Cahn: “The copyright claims are gone, but we have other claims based on contracts.”

Astonishing. As I wrote of SCO back in 2004:

“There’s a scene at the end of Martin Scorsese’s remake of ‘Cape Fear’ in which villain Max Cady, having been shot, stabbed, burned and beaten, continues to threaten his victims even as he’s drowning, handcuffed to a sinking houseboat. I think of that scene every time I read that SCO has filed another motion in its ill-starred copyright infringement suits.”

But how do you find cool music blogs? That’s where Twones, a Dutch start-up wants to come in: It has launched a new service designed to bring you stuff you might like. Or at least that you’ve never heard before.

Sound familiar? It should: You can describe The Hype Machine the same way, and that service is already cherished by Web-savvy music lovers.

And investors, too. But due to worries that it’s a lawsuit waiting to happen, Hype Machine hasn’t attracted any serious money despite four years of accolades.

That’s because the MP3s the music blogs post are almost always copyright violations, technically speaking. That’s not a problem for the blogs because the big labels now tend to turn a blind eye (usually).

But Hype Machine caches those songs, which means you can hear them almost instantly, but which also puts it in a legal gray area (at best). I know of at least a couple prominent investors who are convinced they would be sued as soon as they sent the company a check. So they haven’t.

Back to Twones. The service, which is set up as a toolbar for Firefox browsers, sidesteps Hype Machine’s legal landmines (I think) by simply sending users directly to the music blogs themselves. When you select a song (or Twones picks one for you) it opens the page in a new browser window, and the song is supposed to play automatically.

So no legal liability (theoretically). No licensing fees either.

But it’s not nearly so much fun. At least in the brief spins I’ve seen. Precisely because the songs aren’t cached, going from one Twones blog to another can mean there’s a gap between songs as the page loads. Or no song at all if Twones steers you to a dead link.

It could be that all of this is simply early-stage kinks, because the service just opened to the public this morning. But I fear that playing by the rules will ultimately cost Twones here.

“The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small,” Bronfman said during an earnings call today. “There is what I would call a very paltry licensing fee per song. … I think the industry as a whole needs to take a very different look at this business and participate more fully and in a much more partnership way. And if that does not become the case, as far as Warner Music is concerned, we will not license to those games.”

Leaving aside, for a moment, the question of why Warner (WMG) agreed to a royalty scheme it apparently finds unappealing, you’ve got to wonder why the company persists in lambasting these new media that so obviously invigorate the industry and promote its music. And beyond that, you’ve got to wonder why Warner is doing it at a time when games like Guitar Hero and Rock Star are clearly becoming viable distribution outlets.

Of course, we already know the answer. Bronfman himself gave it to us in a speech last year. “We used to fool ourselves,” he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find, and as a result, of course, consumers won.”

“The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small,” Bronfman said during an earnings call today. “There is what I would call a very paltry licensing fee per song. … I think the industry as a whole needs to take a very different look at this business and participate more fully and in a much more partnership way. And if that does not become the case, as far as Warner Music is concerned, we will not license to those games.”

Leaving aside, for a moment, the question of why Warner (WMG) agreed to a royalty scheme it apparently finds unappealing, you’ve got to wonder why the company persists in lambasting these new media that so obviously invigorate the industry and promote its music. And beyond that, you’ve got to wonder why Warner is doing it at a time when games like Guitar Hero and Rock Star are clearly becoming viable distribution outlets.

Of course, we already know the answer. Bronfman himself gave it to us in a speech last year. “We used to fool ourselves,” he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find, and as a result, of course, consumers won.”