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.
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