If you want to get paid for your apps, don’t give them away for free. There’s nothing remotely controversial about that statement, yet it’s the overriding theme in the most recent developer outcry regarding the Amazon App Store.
To ensure everyone’s on the same page: Amazon recently opened its own Android app store, which puts more of a focus on paid applications rather than free ones. Since the Android Market is already pre-installed on new Android handsets, Amazon has had to promote the store heavily. One way it has done this is with a free app of the day, in which they give away a normally premium app for 24 hours. That’s a great deal for them, but developers should know by now that it’s not all that hot for them.
In fact, Shift Jelly, the outraged developer, knew of this. As they detail in the above-linked blog post, they initially declined Amazon’s offer to become the free app of the day. They knew that their business model revolved around selling the app, and so giving it away probably wasn’t the best idea.
But Amazon came back with the typical product placement arguments, claiming that exposure from being the free app of the day, combined with 14 subsequent days of main page placement, would increase sales overall. To a business-savvy developer, these arguments would not have checked out. Yes, there is exposure to be gained by being the free app of the day. People will see it front and center on Amazon’s app store page. That’s good.
But if they’re going to get the app, they’re almost certainly going to get it right then and there, when it’s free. That’s bad. Again, Shift Jelly knew what it was getting into when it agreed to be the free app of the day. They even posted the email exchange between them and Amazon, in which it is explicitly stated that they would make no revenue off the app when downloaded for free. (It also makes sense; Amazon doesn’t make anything, so they have nothing to share with the developer.)
Unsurprisingly, the free app feature did nothing for Shift Jelly’s long-term sales. After a small bump in sales the following day, they’re now back to where they started. Which, again, is to be expected. Why would people all the sudden start buying the app more? If anything, the developer is likely to sell fewer apps in the future, because so many people — over 100,000 in this case — downloaded it for free. That lessens the overall market for people who will actually pay for the app. All of this should have been clear to the developer.
It appeared that it was, too, until they caved to pressure from Amazon. The reason for the free app of the day is clear from Amazon’s end. They want to create exposure for their new store, which faces a number of obstacles. First is the aforementioned Android Market, which is easily accessible and contains tens of thousands of free apps. Amazon focuses on paid apps. By offering one free app per day, they’re getting a rush of people who are looking for that app. The idea is that they’ll stick around and check out the rest of the inventory — which, again will make them money.
It’s not likely that someone comes to the site, sees the free app of the day, and returns two days later to pay for it. Amazon, with its long tail strategy, clearly wins from this, while the developer is left out to dry. The problem is that developers should know this. They should work through the logic and see that they stand to gain little from being the free developer of the day. They might stand to benefit from being in Amazon’s app store overall, even if the terms of use are wildly restrictive (Amazon sets the price, giving the developer no say, and even rewrites its product descriptions).
The expectation in the Android Market is that an app will be free. The expectation for Amazon is that apps will cost money. And so developers wishing to charge for their apps might realize a greater degree of success with Amazon. That is, if they avoid the free app promotion. Hopefully, developers do pick up on this business reality and start declining Amazon’s offer. Then, and only then, might the deal change. It would benefit developers far more if there were limitations to the free app. Say, the first 10,000 get it for free, while everyone else that day gets it for a buck (or some kind of discounted price).
That’s still a promotion, and it has the potential to make the developer, and by extension Amazon, more money. But Amazon has zero incentive to do this until the developers reject their unfair free app promotion. If they don’t, Amazon will continue to employ the practice that brings them the most daily visitors.
On the larger issue I agree with Kevin Tofel at GigaOm: “Amazon is likely building up this marketplace so that it can use it as the exclusive app provider for its tablets, which are slated to hit the market later this year.” Of course, I couldn’t disagree more with his conclusion: “…Amazon should wan devs to be happy; not upset that they theoretically lost $54,805.14 in potential sales.” False. There was no potential for that sales number, even in theory.
Amazon has its reasons for pushing a free app of the day. It’s up to developers to see through the false claims and realize that if they charge for their app, they’re better off charging for their app.
4 comments… read them below or add one
I am not sure if I agree with this argumentation. If Amazon’s strategy to attract more people to their app store succeeds, app developers will have a larger market as well and benefit in the long term. But of course, if you look only at the one “free” day and a few following days, app developers will loose.
The Free App of the Day is a terrible business model for small developers. I’m pretty surprised that devs still fall for it.
The thing is that – long-term – it is probably also bad for the Amazon Market as a whole. Or actually – I am pretty 100% sure that this is in fact the case.
Think about it for a moment:
Users know that there is going to be a free App every day. When they see a new app that they like, their inclination to buy they are always going to wonder – but what if this app becomes FAP of the day sometime in the near future? Wouldn’t it be better to wait and see before buying it?
In short, buying of even paid apps are without a doubt less than they could be, due to the FAD program. I’d say that – even more than the Android Market – the Amazon Appstore builds up the expectation that things will eventually be free.
Wish Amazon allowed us to label apps as being guaranteed to never be part of the FAD program. ;-)
It’s a terrible deal for developers except if they are more interested in future revenue than in current revenue–that is, if they think their potential userbase is growing fast enough to justify losing potential revenue from just about all the people who might buy their app today, in favor of having some of those people as (presumably happy) users and having some fraction of those people spread the word in a world where the potential is notionally greater.
Same goes for cases where their app has some synergy with another app or service that they sell or are planning to sell.
I think you missed the entire point of our article, which was that Amazon did this as a back door deal. Their public agreement with devs is that they get 20% of their asking price, even when their app is given away. Then they said “here’s a new deal, and it’s secret”
More importantly though, there was no data out there as to what happens when you’re Amazon app of the day. We googled long and hard and found nothing. So you’re article is written with the benefit of hindsight. Calling things ‘obvious’ once they’ve happened is hardly helpful. Nothing about it was obvious. We’ve given away stuff in the iOS app store before with great success.
Finally there are some apps, like Field Runners which benefitted greatly for being free app of the day, because they featured in app content, so it’s not all doom and gloom.