Since Amazon opened their app store, they have offered a free app of the day each and every day. The deal has always been if an app is featured for free, the developer would get at least 20% of the list price. It does not appear that Amazon has changed this policy, but they are making offers to certain developers to feature their app for free with nothing in return.
Developer Shifty Jelly recently received the following from Amazon:
“As you may already know, the Free App of the Day offer placement is one of the most visible and valuable spaces on the Amazon Appstore. We would like to include your app “[name removed]” in our Free App of the Day calendar. We have seen tremendous results from this promotion spot and believe it will bring you a great deal of positive reviews and traffic. It is an opportunity to build your brand especially in association with a brand like Amazon’s. The current price of this placement is at 0% rev share for that one day you are placed.”
The question is why is Amazon doing this? We will get into that in a second, but lets first analyze what happened in this real life example.
At first, you might think the offer is pretty good in that you can get an app in a lot of hands and maybe it will show future growth. At the time Shifty Jelly made the decision, there was about 1,000 downloads from the Android Market priced at $2.88 each. Shifty Jelly probably figured that by agreeing to this deal it could really get things going. Unfortunately it was not the case. Amazon ‘sold' 101,491 copies, and of course Shifty Jelly received nothing which was the deal.
Did future sales grow as the offer promised? The day after had a little increase, but after that, everything went back to normal. Now Shifty Jelly has to add servers to accommodate thousands of new users, as well as handle a lot more support requests, with no additional revenue.
It should be noted that we don't believe Amazon's current pay system has changed, but it does appear that they are making these offers to developers in hopes that they will take it. Every case is different and each developer needs to evaluate their situation. It might make sense for certain developers, and others like Shifty Jelly, it doesn't. This is something that all developers need to know because the promise of “tremendous results,” will most likely not deliver.
To clarify, the following is Amazon's pricing system which we reported back in April:
Amazon reserves the right to control the prices and they will pay the greater of 70% of the purchase price or 20% of the list price. The list price is created by the developer, but Amazon will not allow developers to set their list price above the lowest list price anywhere else.
Now we need to figure out why Amazon is doing this. It is possible that the Amazon app store is not doing as well as they had hoped. I have to think that the majority of Amazon's downloads are from the free apps which normally yields them a 20% cost with no revenues. For example, yesterday Guitar Hero 5 was featured with a regular price of $7.99. If Amazon ‘sold' 100,000 copies, they would pay the developer 20% of $7.99 for 100,000 downloads, which comes to roughly $160,000. With the popularity of Guitar Hero, they probably had even higher numbers. In Shifty Jelly's example, his app has a lower list price, but it still would have yielded him $54,805.14. Amazon gets nothing for these sales, and how many of these people are just downloading the app because it is free and really don't care about it? In a sense, Amazon is paying for people to download an app they most likely will never use. It was a winning proposition for developers, but things might be changing.
I don't have any numbers to back this up, but I have to believe that a high percentage of the featured free app downloads are uninstalled rather quickly or destined to be stuck in the app drawer, never to be opened again. This would be fine for Amazon if customers came back to buy other apps, but I doubt they are. I check Amazon each and every day to see what their featured free app is and that is it. I have yet to do any other app purchases with Amazon, and something tells that most of their customers are doing the same thing.
I would love to hear from our readers. If you are using the Amazon app store, are you like me in that you only grab the featured free apps that intrigue you or are you actually purchasing other apps as well?
[via shiftyjelly]
Hmmm…great to find out, there were without a doubt a few points that I hadn’t thought of before.
@ian yep, go read the blog post by shifty jelly, they and a few others have bowed out of amazon altogether, their apps are still there because amazon won’t let them remove them though, but they will never again be updated.
This makes me feel good about not buying anything from this store. I may find stuff here, try the free apps, but anything I buy will be from the google market or developer website.
Didn’t someone reveal recently that they were offered the chance to be a free app for the day, but declined because the T&Cs of the offer meant they’d get zero money for it? They asserted this was normal practice (from conversations with other developers).
Amazon appstore is not worldwide, so their “Exclusives” means that the rest of the world has to wait longer for that app. We cannot get the free app of the day either.
I know there are some possible work-arounds, but why bother.
I’ve never bought anything from their store. But I know 1 person who bought angry birds off of it. I usually get the free app if remotely interesting. I often won’t install it, or cancel once I see the sketchy permissions list. I have seen a couple apps there, and gone to the android market to purchase them though.
I bought 1 app from Amazon and any updates that come out are always several days later on Amazon than they are on the Market. That’s why I don’t buy apps on there anymore.
I do the exact same thing. I open the appstore, check the free thing, if it looks remotely interesting I will get it. The majority of the time, I will get the free app but won’t bother to install it, just in case I want to view it in the future.
I’m not a fan of the amazon store. I don’t like browsing through it and I would rather have all my applications in one market that I can update everything together (Android Market).
And with the new UI for the Android Market, making it easier for find new apps to check out and a much more eye catching interface, I have even less reason to bother with the Amazon AppStore.
I have not purchased any apps from the Amazon app store, but I have “purchased” a bunch of the free ones. However, of the ones I have purchased, I have actually installed precious few. I often get the free ones just in case I decide I want it in the future.
The one big advantage the Amazon store offers is that accounts are tied to an email instead of a Google profile. This has let me install useful apps (like SeekDroid and WeatherBug Elite) on my phone and my wife’s, without having to pay more than once (although I picked up both when they were offered for free).
Yes, this is good for the consumer but bad for the developer. I’ll make use of their app store while it lasts.
I rarely use the amazon app store and when I do it’s just for the free app. I only open it up when I see a review of an app on a website saying “amazon free app of the day”. Also I find it to be slow to open compared to the android market.
No, I would never buy an app from the amazon app store. If the amazon gets rid of the app store (due to lack of sales most likely) then you’re screwed for future updates of the apps you purchased.
Time wasters!
I can admit i only use it for the free app of the day. The thing that turned me off to it is you have to have the appstore app on your device or the apps would no longer work. So there is no way i am paying for anything from there. Should i decide i no longer want to use Amazon i could no longer use what i own? I don’t think so.