Amazons Apps Store

(This was prompted by a question asked by Reto Meier)

As many of you may know my company built and later sold AndAppStore over the course of two years. During that time we kept an eye on the competition and received feedback from users and developers and got a good idea of what both sides wanted. I commented on Google Market because it was the main distribution channel for developers, but I rarely commented on competitors alternative app stores because each of them has their own business plan and all of the legally operating ones seemed to be doing their best to strike a balance between what they need to survive and what users and developers want.

And then Amazon came along.

When Amazon approached my company about listing the apps we’d developed in their app store I had a lot of reservations about it given the terms we were shown. Now their app store is starting to roll out it seems few (if any) of the concerns I raised with them have been addressed. Given Amazons brand it might appeal to many developers to list their apps with them, so I’d like to highlight a few of the issues I found that left me thinking Amazons app store is more about what Amazon want than helping developers market their apps;

The yearly $99 developer fee

Amazon don’t produce the Android SDK. Amazon don’t have control over how the Android platform develops. Amazon certainly don’t have any inside knowledge about every Android device out there. And, as far as I can tell, they’re not offering any Android developer support. So this all this leads to one question;

Why does Amazon think it can charge developers the same price as Apple who have control over the iOS SDKs and Platform, have intimate knowledge of the hardware the apps are running on, provide direct developer support, and can change the platform in response to developer requests?

I couldn’t come up with an answer for this, and it appears Amazon couldn’t either, because when I asked them the question directly last year their response was to waive the fee (which they’re now doing for everyone, but only for the first year).

I can understand there is a need to cover the costs of approving an application, but wouldn’t it make more sense for that to come from their cut of your application sales? For example; Charge the developer a one-off $25 joining fee and then take a 40% cut of a developers application sales until $99 has been taken at which point it drops back to 30%. That way the developer doesn’t have a big outlay and Amazon have an incentive to promote and sell applications in order to cover their costs.

The other slightly odd thing is the flat $99 fee. This means a developer who has 1 application to list will pay the same as a developer who lists 100, which would suggest they’re looking to either discourage, or make a big profit from, developers with a small number of applications.

As it currently stands they could take $99 per year from you and bury your app at the bottom of their recommendations listings if they wanted to. They still get their money but you have no guarantee from them any users will ever see your application.

Pricing for paid apps.

Amazon has total control of the price of your paid app, right down to being able to make it available for free. This is something that you should never accept willingly.

Think about it for a moment; would you work for someone who says “We’ll pay you somewhere between 20% and 70% of what you want us to charge and we’ll change the payout whenever we feel like it”?

Most people wouldn’t.

If you’re thinking of making your listing price high enough so that 20% is the same as the 70% you receive from other stores then you’re probably out of luck because the Amazon T&Cs I saw last year said you have to list your app at the best price it’s available on any other store (including the price it may be offered in any promotions).

As a developer you should always be in control of what someone is charging for your application because you’re the one who knows how much you need to make developing it worthwhile. You can factor in a 80/20 or 70/30 split, but you can’t account for Amazon suddenly deciding to offer all your apps at a quarter of the price you’re listing them at elsewhere (possibly just to increase traffic to their app store) and then only paying you 20% of your list price.

If Amazon control your pricing it means they can offer your $5 app for free, publicise your app as being free from their store, and then pay you only $1 per copy instead of the normal $3.50. The only way you could stop them is to remove your app from their store entirely, which may take days, by which time you’ll find your sales on other app stores will have significantly dropped.

The thing to remember is Amazons interests are focused on selling anything, so if they lose one developer with 3 apps listed, but gain the attention of 3000 new users by offering your app for free, they could consider that worthwhile, even if you don’t agree.

Problems for international developers.

If you’re a non-US developer read the FAQ carefully. It says that unless you provide the relevant US tax documentation they can put a tax withholding of up to 30% on your royalties. That means that even if they decide you are entitled to the 70% maximum royalty rate they may withhold 30% of that for tax reasons.

So if your app is listed at $1, and you’re due a royalty of $0.70 you may actually only get paid US$0.49 after the tax withholding. This means, for international developers, after tax, the best possible split is more like 50/50 than 70/30 unless you want to get involved in the US Tax system.

You also have to consider their payment cycle. For international developers you will only be paid when you’ve made over $100 at which point you’ll get a paper check which, if you pay it into a non-US bank, will normally incur a charge when it’s converted into the currency your bank account it is. So you’re taking another hit on your revenue due to Amazons choices.

Hiding the developer agreement.

You should always be wary of generic contracts which aren’t publicly available.

When you’re dealing with contracts between you and another party (or a limited number of other parties) having an NDA in place is normal because the terms will usually have been worked out for that agreement. Things you’ve accepted for that agreement may not be acceptable for other agreements with other parties who can’t guarantee a certain level of income or a certain amount of distribution, so the secrecy of an NDA avoids other parties saying “I want it at the same price as X” and it avoids X giving away their predicted sales figures.

When it’s a “terms of use” agreement that applies to anyone who signs up to a non-invitation service all of the terms of use should be public so you know exactly what you’re getting in to before you sign up.

 

As it stands I would recommend developers steer clear of Amazons store, but if you think it might be a worthwhile proposition feel free to leave your comment below…

Please Note: Because the finalised developer agreement isn’t publicly available I can’t comment on the specific wording in it because the FAQ has enough objectionable points to stop me signing up for the portal.

27 thoughts on “Amazons Apps Store

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  1. “The thing to remember is Amazons interests are focused on selling anything, so if they lose one developer with 3 apps listed, but gain the attention of 3000 new users by offering your app for free, they could consider that worthwhile, even if you don’t agree.”

    This argument is entirely backwards. One giant benefit of using the AMAZON store is to leverage their existing customer base.

    Also, it’s notable that SW costs nothing to produce so it’s impossible to “take a loss on each sale and make it up in volume” (Amazon also has a minimum payment while there’s no cap to sales). The advertised publicity of being a “loss leader” will likely more than make up the POTENTIAL loss in revenue, and I’m sure there will many companies would jump at that opportunity.

    If anything, this post seems to be the perfect example of why the in’s and out’s of how business works should be trusted to people who are pros at that aspect of the game.

    1. You seem to have misunderstood a few things;

      – Software does cost money to produce. There’s the cost of the development equipment (PC, testing devices, backup devices, software), running costs (electricity, maintenance, upgrades) and the cost in peoples time. Some people may give their time for free, but very few are given all of the software and hardware they need to develop their apps for nothing.

      – Loss leaders which work for Amazon may not work for individual developers. You seem to assume that all apps will be a success, which is never something you can guarantee, so although Amazon may sell an application at a quarter of it’s list price there is no guarantee they’ll sell three and a half times the volume which the developer would need to make up for the lost revenue.

      In short you’re assumption that “SW costs nothing to produce” is simply wrong, and your suggestion that being a loss leader will “likely more than make up the potential loss in revenue” is far from guarenteed.

      1. You misunderstood that phrase. It means the cost for additional copies is approximately zero. You cannot “lose” money by selling more like you can on a physical product, which is why “loss leader” is placed in quotes.

        A “loss leader” is usually a product that is prominent featured because of the fact that it would be enticing. A useful and appealing item that is on “sale” for half the price can easily sell twice as much if so advertised.

        This brings us to the next point which is the advertising itself is WELL WORTH any risk of potential loss. I would anticipate developers lined up around the block to be picked to be featured sale items, especially those who make quality but lesser known SW. Plus, why would Amazon purposely choose to put items that don’t work in this capacity?

        Which again brings us to the main summary. Amazon has proven itself in every context the ability to sell to customers, whether digital books, music, video, electronics. This is reflected in their YoY growth. I have not idea why any random dev would place greater faith in their own ability to market and price when there are the best pros in the business willing to do so a for what’s a very reasonable cut.

        1. If Amazon offer a product for free, then pay the developer 20%, that is a loss leader for Amazon. As the developer is forced to offer Amazon the lowest price the app is offered on all other markets any business model the developer has created based on predicted sales to cover graphic designers costs, PR, etc., goes out of the window because instead of 70% of, say, 10,000 sales, they may now see 70% of some and 20% of the rest with no guarantee that there will be an increase in volume to offset the decrease in payout.

          Advertising is not always worth the risk. I have talked to more than one developer who spent several hours going through the approval process to be featured in a large multi-national carriers app store only to sell less than 20 copies via the store in 3 months and several thousand via other channels. Even at the minimum UK wage the money made from those sales didn’t cover the cost of the time spent meeting the listing requirements.

          I don’t doubt Amazons ability to sell things, what I’m calling in to question is why they want the right to force a price on a developer for the developers software rather than agreeing to negotiate any promotional cost reduction with the developer as and when it’s necessary.

          If you still believe that this could be a good thing I would suggest you look at Fixed Book Price Agreements where many countries have enacted laws to prevent publishers and authors of books being hurt by the same practices Amazon wants developers to sign up to.

      2. Why do you keep assuming that Amazon is completely incompetent at MAKING MONEY FOR THEMSELVES? Literally all of recorded evidence goes against this assumption and yet you raise it axiomatically.

        Given the choice between putting several products on sale as “loss leader”, why would they choose something that didn’t work to make THEMSELVES the most money in that role? Why would they not choose something that elevates the profile of EVERYONE involved?

        “Advertising is not always worth the risk.” Or maybe his app was inappropriately priced for what people thought it can do for them? But thanks for reinforcing the point that marketing should be left to pros who return some of the best results in the industry YoY. Hey I have an idea: why doesn’t the dev, who isn’t very good at the customer facing aspects, give people who are obviously very good at this some control for a measly 30% cut?

        BTW, fixed book price agreements are good at maybe protecting things that are in unique demand, which is generally not true in SW and especially not true for the majority of devs. So are you promoting protection of a few even in the best of circumstance for your argument over the interests of everyone? Amazon’s EXCELLENT record at selling the long tail (which ironically fixed prices are supposed to protect) again seems to indicate that it’s them and not your lot who know what they’re doing.

        1. You seem to now be ignoring what I’ve said in the article and comments and established facts, so I’m going to ask you to ensure your comments reflect what I’ve said or I’ll begin to remove your comments as spam. I’m not sure if you work for Amazon, but I’m beginning to suspect you might be in their PR department, so if you do work for them please be honest and say so.

          I did not say Amazon don’t know how to make money. What I said was that what makes money for Amazon may not be in the interests of specific developers. Companies often run loss leaders on products they don’t manufacture to bring customers in to their stores to raise awareness of what they offer (e.g. Samsung recently announced £200 of eVouchers for free music, books, and software if you buy a Galaxy Tab). I didn’t say no-one will make money from what Amazon will do, I pointed out that specific developers may lose out if their products become the loss leaders.

          As I said; the apps from the developers I mentioned sold several thousand copies through other channels. This was at the same price. If it wasn’t appropriately priced why did it sell so many copies elsewhere? At least one of the developers had the support and help of the carrier, and the carrier produced some advertising material for free. That was before it went on sale. It still sold < 20 copies.

          What I'm promoting is allowing developers to specify the price their app is sold for, not a system where developers are forced to set their prices high. As I've said before; Why don't Amazon offer to negotiate any discounts as and when needed? Why is there the need to force prices on developers? If an app isn't selling it's in the developers interest to negotiate something which may work better, but if an app is selling well it's certainly not in their interest to have a (potentially large) price cut imposed on them which will cut their revenue from sales.

      3. “You seem to now be ignoring what I’ve said in the article and comments and established facts, ”

        If I dodged something, please point it out as I take my integrity seriously.

        “I’m not sure if you work for Amazon, but I’m beginning to suspect you might be in their PR department, so if you do work for them please be honest and say so.”

        No I don’t, but I’m probably more intimately familiar with how they operate in part simply because I enjoy knowing things.

        “I pointed out that specific developers may lose out if their products become the loss leaders.”

        They might, but it wouldn’t be in Amazon’s interest to do so anyway as pointed out before (screwed devs can leave, and it poisons the well).

        My point as before is that Amazon simply doesn’t have to. Given two products that are candidates for “loss leader”, why would they NOT choose the one with more flexible demand elasticity? They win, customers win, the dev picked wins (relative to the one not picked).

        Again, to SHOW your point that Amazon might screw any particular individual over, you have to create a scenario where it’s unavoidably true. I’m not even saying such a scenario cannot exist, but rather that it seems difficult to concoct one, to the point where it’s irrelevant in the overall scheme of things where the success of Amazon is almost completely equivalent to the success of all the devs.

        “This was at the same price. If it wasn’t appropriately priced why did it sell so many copies elsewhere? ”

        Don’t you think it’s a little hard to guess given such limited context? Obviously price isn’t the solution to everything and anything. However, Amazon historically leveraged this and customer experience to get to where they are now. It clearly works.

        “Why is there the need to force prices on developers?”

        Because the whole point is that they trust Amazon to set the best price to make the system work for everyone? There are sometimes system effects where there might be a local benefit if no one changes, but a greater benefit if everyone changes. For example, big box stores work best when the customer trusts that they will get a good price, but it’s not necessarily in any one supplier’s interest in the very short run to decrease only his own prices. It’s pretty clear that the success of Amazon and total sales for everyone are directly tied, so I’m not sure what the disagreement is in the first place unless you inherent believe they’re only out to spite everyone including themselves.

        “but if an app is selling well it’s certainly not in their interest to have a (potentially large) price cut imposed on them which will cut their revenue from sales.”

        Systems like amazon’s collect a huge range of sales data and the whole point is to measure and analyze to determine if the price is optimum. Sometimes a higher price is better, sometimes lower. This is even cyclical and not entirely invariant on seasons, etc. You see this on their webpage all time, to the point where different users will have different prices for some items. The vast collective experience of determining price on a wide scale is not something generally available to any dev.

        Sure you lose some control, but that’s not always a bad thing if the guys taking over knows better.

        1. “If I dodged something, please point it out as I take my integrity seriously.”

          See the sections where I’ve pointed out I’m repeating myself. I’ve pointed them out where you appear to either not read, mis-read, or mis-understood the point.

          Screwed devs can leave, but as I pointed out it may take several days to have their app removed by which time the damage to sales has been done.

          Once again; I’m not saying *all* developers will lose. Just that some may and developers should be aware of that they may end up being a loser when they sign up.

          It’s really not hard to concoct a scenario where a developer loses out, all you have to do is consider the difference in price and the difference in sales volume. If the price cut imposed on the developer is not balanced out by an increase in volume then the developer would have been better off at the old price. You only need to look for articles on demand curves in economics to see you can cut a price to a level where it does more harm than good.

          “Obviously price isn’t the solution to everything and anything. However, Amazon historically leveraged this and customer experience to get to where they are now. It clearly works.”

          … for them. And as I’ve repeated; What works for Amazon may not work for individual developers, and you seem to agree that individual developers can get screwed over.

          “For example, big box stores work best when the customer trusts that they will get a good price, but it’s not necessarily in any one supplier’s interest in the very short run to decrease only his own prices.”

          And that, it would appear, is you agreeing with the whole point of this article. Individual developers (i.e. suppliers) interests may not be served by handing control over to Amazon who may force a decrease in price on them.

          “I’m not sure what the disagreement is in the first place”

          In a nutshell you seem to believe all developers should take what Amazon are offering in order to help Amazon make money. I’m making the point that developers have to protect their own interests.

          You’re looking at the effect on all developers as one entity that you believe will, as a whole, benefit from Amazons efforts, I’m looking at the effect on individuals as separate entities, some of which may lose out.

    2. Sorry, I left out a very fundamental misunderstanding here. It seems the detractors see this as a zero sum game where what Amazon gains, the devs lose. This is COMPLETELY CONTRARY to how the math and market/publicity works.

      Amazon gains the most when your app makes the most money, Amazon gains the most when your app drives the most customers to know about them.

      At best you can argue they might promote the interests of some apps/devs over others (in a completely voluntary program, btw), but that seems more indicative of a community in-fighting mentality than a rising tide raises all boats which is a more realistic model of Android and smartphones in general.

      1. Once again you’re not reading & understanding what I’ve written. I’ve not said all developers will lose. I’m saying that by entering into the agreement individual developers open themselves up to being a loser by handing over price control to an entity which has nothing really to lose by slashing prices to 25% of what the developer wants to be paid.

        Amazon gains most when their total sales increase. As I pointed out in the article; there is nothing to say that Amazon gaining new users for it’s store at the expense of a developers apps isn’t what they would consider worthwhile even if the individual developer doesn’t. This is the thing with resellers, for them the “game” is not about maximising profit for every developer, it’s about maximising overall profit across all products sold.

        You seem to be set in your view, but, to me, you’ve still not put a convincing reason over why Amazon should be given free reign over pricing and not have to come to an agreement with the developer if they want to slash the price of any application and thus cut the developers revenue per sale, and as that is one of the two biggest objections I have to their app store (the other being the $99 fee) you’ve not persuaded me to change my mind on recommending developers don’t list at Amazons store.

      2. “Once again you’re not reading & understanding what I’ve written.”

        No, I’ve addressed EXACTLY what you’ve written. You just don’t like it that what you’ve written is wrong to the point where you threaten to delete the material that shows it to be wrong simply because it makes you look bad.

        “for them the “game” is not about maximising profit for every developer, it’s about maximising overall profit across all products sold.”

        For every dollar that Amazon makes, exactly $2.33 will go into developer pockets. This is not in dispute. They possibly might screw one dev for another, but then the screwed dev would just leave, and nobody’s happy. You’ve yet to show ANY reason why a provably intelligent company would do that.

        “You seem to be set in your view, but, to me, you’ve still not put a convincing reason over why Amazon should be given free reign”

        Their store, their rules. Either you believe Amazon knows what they’re doing, or you don’t in which case, why bother in the first place? The more nuanced answer is that such global price control systems works best when performed in aggregate. You might’ve seen the adjustments that happen to Amazon prices regularly

        Given the kind of backwards stubbornness I’ve seen over this issue, it’s not surprising why it’s mandatory. I suppose it might’ve been more accomodating if they let devs opt out, but it kind of is the revolutionary idea of their store.

        “you’ve not persuaded me to change my mind on recommending developers don’t list at Amazons store.”

        I seriously doubt you’d ever change your mind. However this is a public blog and I hope what I’ve said is convincing to a general audience. But of course you seem willing delete something only because it is compelling.

        It should be noted that the first mover advantage is significant on any online store as customers generally like popular and well-reviewed apps.

        1. “No, I’ve addressed EXACTLY what you’ve written.”

          So where is your reasoning for why Amazon need to force price controls on developers and not negotiate them? The main difference in view between our views seems to be you believe Amazon should have free reign over setting prices and I believe they should get developer agreement over any price changes, but, apart from claiming that they (as “professionals”) know best so developers should blindly trust them (which I’ve addressed with the carrier store example), you’ve not given me a solid reason why Amazon need this condition for every app.

          The “threat to delete” is a warning that if you don’t keep on topic your comments will be treated as spam. I have no problem with you putting another side to the argument, but I do have a problem with you going off topic or ignoring things that I’ve already said.

          “For every dollar that Amazon makes, exactly $2.33 will go into developer pockets. This is not in dispute.”

          Sorry, that simply isn’t true. If a $5 app is sold by Amazon at $1.50 the royalty cut is $1.05 (20% of 5 = 1, 70% of 1.5 = 1.05). If the developer is international and non-US tax involved they get 30% withheld which means US$ 0.73 goes in their pocket. In this situation Amazon gets $0.45 and the developer gets US$0.7, which means, for every $1 Amazon gets the developer sees $1.62 in their pocket, and it may be even less than that if their bank charges them a foreign exchange fee. Feel free to point out any errors with my calculations.

          On the screwing developers front; And for the 3rd or so time; Amazon may screw an individual developer to get more users to its’ store. It’s something that happens in many sales situations where an increase in footfall is more important to the store owner than a single supplier because the store owner may believe that the increase in awareness and traffic will result in more profit than keeping that supplier on-side would generate, or that the supplier will take it on the chin because they want to be remain associated with the store. Ask any UK dairy farmer about the practice and supermarket milk pricing, they’ll tell you it’s a real life business practice.

          “The more nuanced answer is that such global price control systems works best when performed in aggregate.”

          And that is part of my point. As Milton Friedman said “Never try to walk across a river just because it has an average depth of four feet.”. Just because something looks OK in aggregate it doesn’t mean it’s good for an individual, and that’s how I’m looking at it, from the point of individual developers. At the end of the day I, and other developers, are individuals who may not be on the beneficial end of the aggregated effect.

          First mover advantage tends to be short term and only then if the market size is limited. With 100,000+ apps and developers needing to push apps to cover the yearly fee, I can see first mover advantage not counting for much in this case.

  2. This thing about “It means the cost for additional copies is approximately zero” is not always true.

    Consider the situation where a dev is paying per-unit license fees to include some content/code in his app. The 20% list price thing is nowhere near satisfactory in dealing with such costs. He must be able to set a minimum price without having to “hack” the list price to five times that value.

    1. I would concede it’s not always true, but it is for the sake of that argument. Software is not like typical physical products where a very large portion of the price is fixed, where a “loss leader” literally means taking a loss on every unit sold.

      If someone’s paying significant licensing themselves, either Amazon needs to make concessions or that store is not right for them.

  3. I’m going to start a new top level comment. Sorry but the interface is kind of terrible.

    “Sorry, that simply isn’t true.”
    It absolutely is if you’re don’t use disingenuous arguments.

    “Feel free to point out any errors with my calculations.”
    Up to 30% withholding is for potential tax reasons to cover their ass. They don’t keep it, at least not legally. You argument boils down to essentially it’s possible not get $2.33 in total because they won’t help you dodge taxes?

    “On the screwing developers front; And for the 3rd or so time; Amazon may screw an individual developer to get more users to its’ store. ”

    Yes, and I’ve addressed it every single time. Screwed one dev in the interest of others doesn’t work since it’s entirely voluntary program and it’s not an actually problem especially given that “sales” on products that can’t go negative net can usually be a benefit to everyone involved. YOU have to supply a reason why Amazon would take the worse route instead of the superior one I’ve outlined above. Plus, given that you recommend not using amazon AT ALL, why would you fear devs might leave the store? How does that logic work?

    “at the end of the day I, and other developers, are individuals who may not be on the beneficial end of the aggregated price.”

    Then you or others who might end up losing (note that they are mathematically guaranteed to be a minority) have entirely the option to not participate. Again, I’m puzzled at that kind of logic. Why would you not want to try something where you’re mostly guaranteed to win on average, can leave anytime, and the losing is really pretty theoretical at this point?

    “first mover advantage tends to be short term and only then if the market size is limited”

    First mover is pretty obvious in any kind of market. It’s often the only way the little guys can get anywhere before the big money steps in with all the attendant benefits (even if it’s only to copy and polish).

    “developers needing to push apps to cover the yearly fee, ”

    I think it might be ok too if they can somehow limit this to the loyalties recovered to encourage enrollment, but it is supposed to be somewhat of of a “premium” or at least well-regulated shop and $100 as a sign of good faith isn’t exactly intolerable and can help filter out the riff-raff. Frankly if you can’t even invest $100 in the job, it kind of calls into question your level of commitment.

    1. “It absolutely is if you’re don’t use disingenuous arguments.”

      What’s so disingenuous about a real world example? I have no interest in getting involved in the US Tax system so I would be facing the exact situation I showed.

      “You argument boils down to essentially it’s possible not get $2.33 in total because they won’t help you dodge taxes?”

      No my argument boils down to it’s not, as you claimed, true, that every developer will get $2.33 in their pocket for every $1 Amazon gets. The reasons are secondary, the facts are you made an incorrect statement and tried to push it as an indisputable fact.

      “Yes, and I’ve addressed it every single time…”

      You haven’t, you’ve just ignored it and gone on to ignore the effect of individual developers and focus on what makes money for Amazon, which is not what this post is about.

      “YOU have to supply a reason why Amazon would take the worse route instead of the superior one I’ve outlined above.”

      That is in the section you quoted. To increase visibility of the store overall. (see the previously given example of dairy farmers).

      “Plus, given that you recommend not using amazon AT ALL, why would you fear devs might leave the store? How does that logic work?”

      My recommendation is based on the existence of alternatives which serve developers interests better by putting them in control of their pricing and thus allowing them to control their revenue such as Google Market, AndAppStore, SlideME, GetJet, etc. Why put the effort into a store which appears to be designed to serve the store owners interests far more than the developers when developers can help enhance stores based around their interests?

      “Why would you not want to try something where you’re mostly guaranteed to win on average, can leave anytime, and the losing is really pretty theoretical at this point?”

      Can you point me at the guarantee that they’ll mostly win? If the app store gets 1,000 apps there only need to be 499 losers and 501 winners for the store to claim, on aggregate, it offers a better service, but that is little comfort to the developers involved in the 499 apps which lost out (That’s what the whole Milt Freidman quote is designed to warn against).

      “Frankly if you can’t even invest $100 in the job, it kind of calls into question your level of commitment.”

      So developers of free app should shell out $100 every year just to show their serious? Why?

      Amazon isn’t operating in a vacuum. It’s competitors either offer more services for the fee (e.g. Apple, Microsoft), or have more control over the platform and offer a lower price (Google), or charge nothing at all (AndAppStore, SlideME, GetJar). $100 a year may not seem much to you, but in a market where $100 a year buys a lot more than Amazon are offering then it is relatively expensive.

      1. [A reply to this by Stringer Bell was removed due to containing only personal insults and repetition of points they had already made which had been addressed. This action was taken in line with the publicly visible warnings issued to them]

  4. “See the sections where I’ve pointed out I’m repeating myself. I’ve pointed them out where you appear to either not read, mis-read, or mis-understood the point.”

    Yes, you’re repeating yourself on issues that have already been addressed, so it’s kind of annoying.

    “If the price cut imposed on the developer is not balanced out by an increase in volume then the developer would have been better off at the old price. ”

    Yes, that’s trivial, but in order to make the argument stick you have to show real situations where this benefits Amazon in a way that doesn’t benefit a dev, and no, hand-waving does not count. In the “loss leader” scenarios I’ve show this is hardly true given it’s to everyone’s advantage to pick the best (ie most elastic) products to that end. True you can simply repeat the argument, but you cannot say I’ve not addressed it.

    “… for them. And as I’ve repeated; What works for Amazon may not work for individual developers, and you seem to agree that individual developers can get screwed over.”

    In theory individual devs can get screwed over. We’ve yet to determine a concrete example significant enough to matter, and it’s against the interests of Amazon to do so even if we could discover one. These details really do matter. Now I’ve just repeated myself, too.

    “And that, it would appear, is you agreeing with the whole point of this article. Individual developers (i.e. suppliers) interests may not be served by handing control over to Amazon who may force a decrease in price on them.”

    I believe the point of the article is not that there is a theoretical possibility however unknown that something might go wrong for any individual in a system that would work out pretty well for everyone in general.

    If that’s indeed the point, I think readers would take the conclusion as rather incoherent to the body.

    “In a nutshell you seem to believe all developers should take what Amazon are offering in order to help Amazon make money. I’m making the point that developers have to protect their own interests.”

    As pointed out, the system is exactly the opposite of a zero sum game as you’ve tried to imply. At this point, it just seems like you don’t want anyone to benefit simply because you believe individually there’s a possibility you might not benefit. Or you simply don’t want to admit to being wrong in general and at best correct in some small theoretical manner.

    1. “Yes, you’re repeating yourself on issues that have already been addressed, so it’s kind of annoying.”

      Imagine how it feels to keep repeating them because you’ve not understood the perspective of this entire post.

      “..you have to show real situations where this benefits Amazon in a way that doesn’t benefit a dev”

      Please do read the article on demand curves. You really will find it enlightening. As the store hasn’t opened “real world” examples of situations in its app store can’t exist, but I can make comments based on previous experience and established and accepted economic practices, which is what I’ve done.

      “True you can simply repeat the argument, but you cannot say I’ve not addressed it.”

      Have you thought I’m repeating it because you haven’t? As I keep saying this is not about what benefits Amazon or an aggregate effect across a whole group of developers, this post is about what benefits each and every developer, and as you’ve agreed, some developers will get screwed over by Amazons policies. This isn’t the case with a fixed share agreement where the developer controls the price.

      So unless you have an example of how reseller controlled variable pricing benefits all developers you have not addressed the point of the argument.

      “I believe the point of the article is not…”

      Hold up, I wrote the article and it’s on my blog. What makes you think you know what the point of it is better than I do?

      I’m going to skip the rest of your comment because when you start tell me that I don’t know what the point of a post I wrote on my blog is then I get a strong impression you’re one of these people who just thrives on having people who will engage in an exchange with you, and not matter how much pleasure you may gain from it I’m afraid I’m done repeating the fact that Amazons policies may well create some losers and developers need to be aware they could be amongst the losers and their total sales and sales on other app stores could easily be negatively affected by Amazon imposing a price cut that the developer has no control over.

  5. Having read the exchange with Stringer Bell, I think it’s possible to cut through the confusion with a concrete example:

    Suppose I run a company which has spent $100,000 developing an Android application that has a ‘list price’ of $1. Like all hopeful business men, I am expecting the application will be popular – but I don’t know.

    I put the application for sale on the Google Market and the Amazon Market. In what follows I’m going to ignore tax to simplify things, and keep the analysis tractable by assuming that all customers have access to both markets.

    Let’s look at three scenarios:

    1) Contrary to my hopes, the app is not popular. It sells 500 copies on each market, earning the company a total of $700. Amazon don’t bother to promote or discount this unpopular application.

    2) The app is well received, it sells 50,000 copies on each market, earning the company a total of $70,000. Amazon decide to adjust my price in an attempt to boost sales. It works, the price is halved and it sells an extra 100,000 copies at 50c netting an extra $35,000. Relief, the company has broken even (anyone who has actually run a company on a P&L basis will empathize at this point) but with a profit of only $5000. Note however that Amazon have made any further sales in the Google Market very unlikely.

    3) The app is wildly popular and 1M people want to buy it! If the pricing remained unchanged, this would bring the company $700,000 revenue. But Amazon are tracking the download numbers and the interest in the application becomes obvious immediately. Amazon reason that by reducing the sale price of this popular application they can double their sales of the application by taking all of the sales that would have gone to the Google Market. They will also benefit from the additional traffic to Amazon Market in the form of extra sales of other applications. So they halve the price; it makes little difference to the number of sales because people want the application anyway. Every purchaser buys the application from the Amazon Market instead of the Google Market because it’s cheaper there and the company makes $350,000. Amazon have just cost my company $350,000!

    Given that, as the person running the company, I’m only likely to invest time in developing applications that I *hope* will result in (3), why would I sell my application via the Amazon Market?

      1. The PR Guy is currently having his posts moderated due to the increase in personal insults aimed at me in them. So far I’ve had to block 3 comments and he’s now emailing me and the insults range from calling me “pathetic” and “narrow minded” through to saying “If you dare to debate this in a public forum where you don’t get to censor and dictate what others can say, let me know where to continue the embarrassment.” (Latest: He believes I lack the parts of male genitalia which are a requirement for having a public discussion. Nice man.).

        If he can come back with a reply that focuses on answering the question and not trying to belittle those who disagree with him I’ll be happy to let it through, but given what I’m currently reading I don’t think this’ll happen any time soon.

    1. You make some good points Al and Tom but I’m not sure the Android Market and the Amazon Market will compete with each as much as you think.

      While Amazon will probably release their market as an Android app, it probably won’t be allowed in the Android Market. It violates the terms. Instead Amazon will probably focus on getting their market pre-installed on devices. There are lots of devices that don’t access to the Android Market or are sold in countries that Google doesn’t support paid apps.

      Even on devices that have both markets I’m not sure how many people will check both markets before buying a 99 cent app.

      Another big factor is that most Android apps are free. I have free and paid versions of my apps, but most developers just have a free ad supported business model.

      One last note. I get emails all the time from other markets wanted to put Smart Lock in their app store. Most of it is spam, but even for the legitimate markets I haven’t published my app with them. The main reason is that I have included the LVL copy protection in my app. I’d have to remove it for the other markets. Not a huge deal, but its enough for me to not bother with the other markets.

        1. Yup, but the sale of AndAppStore started shortly after that and development was put on hold, hence why it didn’t arrive. The new owners have been busy updating it for their needs so I can’t say what the new plans are.

  6. …”Also, it’s notable that SW costs nothing to produce so it’s impossible to “take a loss on each sale and make it up in volume” (Amazon also has a minimum payment while there’s no cap to sales).”…

    …”If anything, this post seems to be the perfect example of why the in’s and out’s of how business works should be trusted to people who are pros at that aspect of the game.”…

    Would I trust someone who asserts that software costs nothing to produce and how business works is a game best handled by pros ?

    Probably not.

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