Lawrence Lessig recently posted a summary on the fsfe-uk list about problems that were blocking Theora adoption. Here's a rebuttal, for what it's worth.
His first point, that Theora isn't technically competitive with the lastest batch of encoders for the encumbered MPEG codecs, is entirely true. From Xiph's point of view is that that's a little like saying there's no point in using Linux because it doesn't work as well as Windows, but the technical disparity does need to be addressed.
Monty and Derf have been working on a new encoder the past few months, but there's nothing to show yet. We believe the Theora format has scope to offer similar compression efficiency to h.263 with less complexity. Beyond that, we look to the BBC's Dirac. But in the absence of software to prove the capabilities of the format, one has to take our word, as well as being interested in long term planning, for that to be a meaningful argument.
His second point, about people believing Theora is patented is just FUD as far as I know. We're not aware of any patents. The original developer of the VP3 format which became theora grants rights to any patents they might have on the implementation. Submarine patents are of course always possible, but they affect MPEG and Microsoft codecs just as much as independent designs.
I've heard this argument from two different directions. First from corporations who have already bet on one of the MPEG codecs and want to dissuade any competition, and second from Free Software people, who don't understand how patents work, shrug, say it's all equally bad, and then get behind the proprietary technology.
What happened with the html5 flame fest was that some corporations said they didn't feel the current demand for web content in royalty-free formats justified the additional exposure implementing them would create. That's true so far as it goes, but a very specific statement about their own interests and hardly a reason for anyone else to eschew royalty free formats.
There was a lot of talk at the recent FOMS meeting about how to address the FUD issue and educate the free community about patents. Hopefully some public documentation will come of it. It's been quite difficult to find legal counsel who understands the FLOSS development model well enough to toss ALL the traditional wisdom about patent risk out the window: namely to never do or say anything at all.
All that said, I completely agree with the recommendation that we get people talking. It can only help. Free software can't compete with the installed base of flash video at this point, but we should all be working to offer an alternative for those who can use it, and prepare the toolchain so we can provide the greatest support for software and creative freedom in the next round of web video.