Before I begin let me first say I am am big fan of Amazon in general. I shop at the site regularly, and I have an Amazon Chase Visa card which earns rewards towards future Amazon purchases. With that being said, the Amazon app store is complete failure in my opinion, but they have succeeded in two things: ticking off developers and giving away apps for free.
I recently wrote about developer Shifty Jelly who recently agreed to offer Pocket Casts as the Amazon free app of the day without the normal (20% of list price) compensation. I answered the question on why Amazon started doing this, and it was because their free app of the day is not generating any other sales. They are sick of paying out thousands of dollars for people to just randomly download a free app with the majority of them uninstalling it later. This is no different then if Walmart offered a free product each day, and millions of people stopped in to their local store to only pick up the free product and nothing else. Walmart would still have to pay the manufacturer of the product they purchased, and if consumers did not purchase anything else in the store, it would get old pretty fast. That is what has happened to Amazon. The free app is a fantastic promotion, but nothing more. In Walmart’s case, if they did offer something free each day, I have a feeling people would actually buy other products, so the question is why aren’t people shopping at Amazon for apps?
It is quite simple. They have nothing to offer. When they opened they had about 4,000 apps and now they have roughly 14,000 apps. That would be fine if these were exclusive apps or at least if the majority of them were. In fact, it is very hard to tell what exclusive apps Amazon actually has. If I am in the market for a scientific calculator why would I even look at Amazon? There are over 250,000 apps in the Android Market so it makes sense to search for “scientific calculator” in the Android Market because I will get all the results I need. With Amazon, I will only find a few options if any. Amazon did succeed in getting a lot of people to actually go to the storefront every day for the featured free app, but that is it. I admit it, I hit Amazon every morning to see what is featured, and then I close the application. I know a lot of our readers are doing the same.
Recently the director of the Amazon app store, Aaron Rubenson, said this during an interview on the success of the app store:
It’s going well, very well. To recap, we launched the store on the 22nd of March so it’s been live a little over three months now and the reaction from our customers has been very strong. In the first quarter earnings release, which was just a couple of weeks after we launched, we announced that we already sold millions of apps at that point and it has continued to grow from there.
I don’t have the numbers to back it up because Amazon doesn’t publish download numbers, but from what we know about the Shifty Jelly story, it is easy for Amazon to move more than 100,000 apps with the featured free app. Shift Jelly had sold only about 1,000 copies on the Android Market at the time of the promotion so it was not like it was a highly popular app to begin with. I am confident that Mr Rubenson’s comment of ”millions of apps” is mostly featured free apps which generally is a cost to Amazon with zero revenues. By changing their payout to zero, that only lowered their cost, but revenues were still zero, and they succeeded in screwing the developers.
I can’t blame Amazon for trying to cut the payout to developers because it doesn’t make business sense to pay for something without getting anything in return, but this same argument holds for the developers as well. Amazon knows they can’t drop the program because it is the only reason anybody goes to the storefront, so they tried to fool the developers by saying that it would drive business if they feature it. Not only did they mention it in the offers to developers, but Rubenson confirmed it in the same interview as above by saying the following.
When developers are trying to get their product discovered, the promotion as a free app of the day is a very powerful marketing vehicle. Then once that core base of customers has a product installed, they tell their friends about it. That spurs more downloads. It rises in popularity in our store. That makes it more popular as people are scrolling through the bestseller list and notice it there. So it starts the virtuous cycle from a marketing perspective.
This was obviously the wrong approach because now it is all over the news that it is untrue. I can’t understand why they thought this approach could have a lasting effect. We need to thank Shifty Jelly for exposing this so future developers never sign the dotted line unless they are getting compensated for it. We have to assume that moving forward, developers are getting compensated the normal rate (20% of list price) because by now, no developer should be agreeing to these newer terms.
Where does this leave the Amazon app store? They need to make some drastic changes which include being more open with developers and to stop trying to take advantage of them. It would also be prudent to attract more exclusive apps. Exclusivity will be what drives people to download something other than the featured free apps because most people don’t want to bother with an additional app store unless there is something unique. By treating developers better they might be able to attract those exclusive apps. Until these things happen, the Amazon app store will continue to be a failure, and I will continue to log in once a day for a minute to get something for free (if the app interests me) and do nothing more.