DreamWorks CEO Jeffrey Katzenberg predicts a "pay by the square inch" pricing model

By Nathaniel Mott , written on February 6, 2013

From The News Desk

DreamWorks CEO Jeffrey Katzenberg, speaking at the Founders Forum conference in Los Angeles, has predicted a future where consumers will pay for content "by the square inch." Watching a movie on a smartphone would be cheaper than watching it on, say, a large television set, a move that Katzenberg said would allow film companies to capitalize on markets where the smartphone is more popular than other devices, such as India.

That would differ from the current pricing structure of most digital content, which costs the same no matter what platform it's being viewed on. iPhone, iPad, Galaxy Note, television set -- it doesn't matter, it's still going to cost around the same amount. Shifting to a pricing model based on screen size would make films and other content more closely resemble apps, but the question is whether or not we should want that to happen.

It's easy to justify varying prices for apps based on their platform. Apps, like the Omni Group's productivity suite, OmniFocus, which charges more for its PC app than its iPad app, which in turn costs more than the corresponding iPhone app. Because the Omni Group has to develop and ship each product separately, this makes sense. More platforms means more work, which means more costs. Given the iPhone's limited screen size, and thus the fact that its apps often offer limited functionality, it makes sense that they would cost less than their "larger" counterparts.

Games are the same way. Mobile games in particular follow the app pricing model -- which makes sense, given their coexistence in the App Store -- but this pricing discrepancy exists on "traditional" gaming platforms as well. A console game and a corresponding handheld title are often priced $20 apart (when console games cost $50 many handheld games were $30, now that console games are $60 handheld games are often $40, and so on). Again, the thought is that high-profile console titles require more time to develop and release than simpler handheld games.

Other content (I hesitate to say that games shouldn't qualify as "content") doesn't follow the same model. A song doesn't cost more on iTunes simply because a customer visited the store on their MacBook instead of their iPhone, and the same rule applies to ebooks sold in the Kindle store or the iBookstore. The device doesn't matter.

So there are two groups of digital downloads: "interactive content," which includes apps and games, and "static content," which includes music, books, and, currently, films. If Katzenberg's prediction is correct, films would jump over to the interactive side -- without any added benefit. This can either be a good thing or a bad thing.

Making the jump would be good for people who don't own a television or prefer to consume content (ugh, that phrase) on smaller screens. Why should someone have to pay the same amount to see a movie on their 3.5" smartphone as they would to see it on a 72" flat-screen? Under the interactive content model that wouldn't make any sense, and changing the price according to the experience makes sense.

But, at the same time, it seems that this pricing model benefits a few people while offering the shaft to others. Films aren't being shot and edited for wildly different screen sizes. The person watching on their iPhone is seeing the same film as the person watching on their iPad, and charging customers more money for the same experience, simply because their screen is bigger, and they're able to see more of Clint Eastwood's wrinkles seems ludicrous.

Changing the pricing structure of films blurs the line between interactive and static content. Again, there are arguments for and against the change, and it's a complicated issue that will take some time for content creators and the marketplaces they sell their products through to enact change. There's precedence for the pricing model Katzenberg proposes, but again I have to ask: Do we want static content to be more like apps and games?

Recent technological changes point to "yes." Stories like the New York Times' "Snow Fall" series show what modern technologies are able to add to traditional columns-of-black-text storytelling, and other apps and services want to add more interactivity to other stories as well. At this point, it isn't hard to imagine the distinction between "app" and "book" or "film" to be almost nonexistent, technologically speaking.

There are other issues to consider, however. Just this morning I covered the amount of control Apple exerts over its App Store, and there are dozens of other stories that spark outrage over one app or game being rejected for its subject matter.  This is hardly acceptable when an app or game, two contentious mediums ("Is an app art?" is the new "Is a videogame art?" and is an equally ridiculous question) but it's hard to imagine anyone thinking it's okay for Apple to reject a book or song or (non-pornographic) film on the same premise.

Charging consumers for how they view content instead of how much effort it took to create that content is questionable. Lumping static and interactive content into one big pot and applying the same rules to each seems downright dangerous, given Apple's approach to its marketplaces. It seems that we're working towards a world where both scenarios are a possibility, and it's going to be a bumpy ride.

[Image Credit: AppAddict]