Developers Warned Against Creating Apps For Amazon

In an email sent out to members of the International Games Developers Association, developers have been warned against developing or distributing Apps on Amazon's Android store, amid concerns about pricing and store terms.

Amazon launched their Android App store a couple of weeks ago, and there have been issues regarding the way Amazon are attempting to control the price of products on the store.

In brief: Amazon reserves the right to control the price of your games, as well as the right to pay you "the greater of 70% of the purchase price or 20% of the List Price." While many other retailers, both physical and digital, also exert control over the price of products in their markets, we are not aware of any other retailer having a formal policy of paying a supplier just 20% of the supplier's minimum list price without the supplier's permission.

Furthermore, Amazon dictates that developers cannot set their list price above the lowest list price "available or previously available on any Similar Service." In other words, if you want to sell your content anywhere else, you cannot prevent Amazon from slashing the price of your game by setting a high list price. And if you ever conduct even a temporary price promotion in another market, you must permanently lower your list price in Amazon's market.

It's very similar to the distribution terms Amazon use for the sale of eBooks and other products. The IGDA claim that they have communicated their views to Amazon, who have shown very little inclination to change said terms.

The IGDA does not have the power or inclination to dictate how others conduct their business. However, the IGDA is permitted to express its views on business practices that affect the developer community, and it is the firm opinion of the IGDA that:

1) A developer's permission should be required by any retailer seeking to pay less than the standard percentage of a developer's minimum list price. This could be automated and even "opt-out" with a reasonable period of notice, but ultimately, a developer's permission should still be required.

2) Developers should have the freedom to set a minimum list price of whatever amount they see fit, without regard to pricing in other app stores.

It's very rare that the IGDA would come out and express concern so outwardly towards a specific service, but in this case the terms seem so prohibitive for developers the IGDA felt they had to step in.

If Amazon responds to this open letter, it will likely invoke the success of games that have already been promoted in its Appstore; for example, games that have been featured as Amazon's free app of the day. The company may claim that the success of those games is proof that Amazon's model works. The IGDA believes that this argument is a red herring. Amazon does not need the terms it has established for itself in order to give away a free app every day. Nor does it need the powers it has granted itself to execute a wide variety of price promotions. Other digital games platforms, such as Xbox LIVE Arcade and Steam, manage to run effective promotions very frequently without employing these terms.

Amazon may further argue that its success depends on the success of its development partners, and therefore, that it would never abuse the terms of its distribution agreement. Given that Amazon can (and currently does) function perfectly well without these terms in other markets, it is unclear why game developers should take a leap of faith on Amazon's behalf. Such leaps are rarely rewarded once a retailer achieves dominance.

We respect Amazon's right to stay the course, but as part of our mission to educate developers, we feel that it is imperative to inform the community of the significant potential downside to Amazon's current Appstore terms. If you feel similarly, we urge you to communicate your feelings on this matter directly with Amazon.

Thanks to Adam for the tip.


Comments

    Hmmm, I'll have to keep this in mind when distributing stuff in the future.

    Also Mark, great to see the increase in AU news stories over the past couple of week. Always informative, even if you do cop some crap over it personally e.g. "iMark". It has been noticed! I haven't been checking, but is any of your work being reported on the US site (or are there plans afoot to do so?).

    While it is true that pretty much all app stores currently allow developers/publishers to set prices and then take a fixed cut of sales (what is known as agency pricing in the book publishing world), it isn't at all clear that this is the only valid model or even the best.

    It certainly isn't the case for retail of physical copies of software: in that case, the publisher sells at one price to the retailer and the retailer can sell at whatever price they want to customers to maximise their profits.

    While the 20% minimum cut seems low, having a guarantee of at least 70% of sale price probably puts them ahead in most cases compared to if they received a fixed lower amount per sale.

    It definitely leaves them worse off than pure agency pricing, but I don't think agency pricing is good for the consumer since it removes all competition at the retail level. That said, the requirement that Amazon list prices be no higher than what the software has ever been available for elsewhere also seems problematic.

    My name is Todd R. Levy and my company BloomWorlds, is developing Android’s family friendly app store, to help Android parents discover safe, secure, and appropriate apps by utilizing our hands-on approach to curation.

    After reading IGDA’s advisory about Amazon's Appstore developer’s terms, we wanted to reach out and share our app stores' pricing options with you.

    http://bloomworlds.com/pricing

    Since the developer picks their apps’ price, BloomWorlds feels our model is flexible, fair and innovative to the Android ecosystem. We would appreciate the opportunity to introduce and educate your audience about our app store's other value propositions and developer friendly terms. Please feel free to contact me with any questions.

    Thank you for your time and attention.

    Todd R. Levy

    H3K47-3XC9J-YKGJ9-6MH6K-TCXKZ

      ...And thank you, Mark!

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