Amazon App Store: Rotten To The Core
shiftyjelly.wordpress.com
shiftyjelly.wordpress.com
What I got from this blog post is that they made an uninformed decision, and ended up with an unexpected result that pissed them off from the perspective of "lost sales".
The email from Amazon clarified there were no money to made and sure enough, no money was made.
The added costs of the server is unfortunate and justifiably something to be upset about (especially if you weren't accounting for it), but I have to point out that the sales before the free-app-of-the-day listing[1] were slow: 2, 4, 14, 20 sales... then 101k copies given away in one day.
For an app selling 10-20 copies a day, how much would it have cost that company, paying a PR firm, to get it infront of 101k new users (forget about payment)... how many tweets would you have to get out or blog posts written to make 101k people aware of your app?
Amazon gave that company an incredibly aggressive marketing campaign for 1 day and from where I'm standing, gave that company an enormous opportunity to be successful with a future app or future subscription services for their existing app.
I think things like what Amazon are doing certainly don't fit in the old model of software sales and if you are betting the company on that model, it is going to be a painful trip for you.
Something to consider is that if this app offered a subscription-based premium mode or some in-app micro transactions and just 5% of people that downloaded the app engaged in that, I think the tone of this entire blog post would have been completely flipped about how awesome the Amazon model is. Even if that app could simply be used to announce the release of a new app in the app store from the same company when the time comes that would be a huge amount of people seeing that announcement that would not have otherwise seen it (not the full 100k, but whoever is still using the app).
Given that, I would assert that the Amazon App Store model isn't broken, it is just different and requires some planning to take advantage of.
If you have a flexible business model and can roll with the punches and take advantage of opportunities like these and see them coming you stand to benefit quite a bit from Amazon's free app of the day.
Let's say everything I've typed up until now is garbage and you waved it all away, another reason this was a good thing for the company: reviews.
Out of 101k people that now have this app, how many are going to eventually leave reviews? 20? 30?
How many reviews may be a half to a full star higher because the app was free and there isn't that feeling of being owed value by the reviewer because they got your app for free.
So now let's say in a few weeks (or at some point in the future) this company now has 15, 20 or 30 reviews on this app, all fairly good (4 and above).
Now that the app is no longer free, how much higher in the search results is this app going to show up for people when they are searching for apps like this? How much more likely are people browsing the Amazon App Store to buy this app because it has such good reviews?
I would argue had this guy listened to his co-founder and not flown off the handle, and left his app in the app store, and built off of this success he would have seen sales gradually increase over time, similar to how it was trending before they had the one day give away. All those sales before the give away were people finding the app because (I assume) they wanted an app like that.
The one day give away was likely a bunch of people that just grab every free app they see each day.
Either way, it sounds like he took the gift horse he was given by Amazon, punched it in the horse-face and then let it run off a cliff because it wasn't the exact horse they were expecting.
</end-backseat-internet-business-driving>
[1] http://shiftyjelly.files.wordpress.com/2011/08/results2.png?...
Admittedly, my response was focused more on the other beef than that single point. Given how much other information was in the post, I didn't think the 20% == 0% was the central argument; my apologies for missing that.
My core belief that in the long(er) term that the give away likely would have helped the movement and sales of your app still stands though. I think you leaving it in the store for an extra month is valuable data point, but not quite enough for me to categorically agree with "Yep, totally experiment failure, f Amazon!"
Did any reviews come in from any of those massive downloads? How were the reviews? What was the average score?
I would give up the argument completely at 6 months after a few more update releases if there were 0 reviews and 0 sales, otherwise I stand by my original statement that this was a GOOD thing for you and your company.
It is my feeling that you are focusing too much on this bait and switch. Fine, it happened... but you also have your app on 101k more devices than you did the month before so do something with that, flip your perspective a bit and take advantage of it.
You cannot convince me that having your app on 101k more devices in 1 day is a bad thing (except maybe the server costs). It may be scary/odd/unexpected, but you guys are smart, you will figure out some good way to grow from this.
Why don't server/support costs matter? Why does it have to be that it's more beneficial for these guys to have their software on 100k more devices than not? Why should all business models have to work that way? And why should someone who has a business model expecting to profit from Amazon's advertised 20% be willing to accept waiving that?
OP seems to have a valid complaint against Amazon and a worthwhile warning to others in similar situations, and you're just telling him to suck it up figure out some way around it. Okay, I get what you're saying, but withdrawing from what is by all evidence an unprofitable app market driven partially by a bait-and-switch still seems perfectly reasonable.
Thank you for the feedback.
Amazon looked like it was setting up an app store where Android developers had a hope of getting paid, but so far, they've created a space where the control-freakism runs deeper than under Apple (e.g., the lack of control over basics like device filtering and removing apps from sale), and the return on investment is worse than under Google.
Hell, before pulling out of the Amazon app store, release a new ad-supported version, and wait until a decent number of people have upgraded. Then pull out of Amazon's store. That should help defray the costs of the new hardware. Users can still do as the author suggested: re-buy on Android Market, and for users who had already paid for the app (not on free-app day), ask for a refund. Any serious user of the app will want to switch over to the Android Market anyway, so they can get later updates.
That feels slightly underhanded, but... eh. Server costs are real.
From the FAQ:
What is the payment structure between Amazon and me? Amazon pays developers 70% of the sale price of the app or 20% of the list price, whichever is greater.
I would interpret the sale price of the app to be zero, so they get 20% of list.
Did the exposure count for much in the days afterwards? That’s also a big no, the day after saw a blip in sales, followed by things going back to exactly where we started, selling a few apps a day.
- People who do see your free app buy it (if interested) and net you $0. They won't wait to buy tomorrow because why not buy it for free?
- People who don't see your free app won't buy later because they weren't exposed to you. Very few people will have "heard" of your app without having had the chance to buy it.
How so? Why would there be any expectation that sales would spike in the proximity of the app being a featured freebie? Does the grocery store sell more chocolate milk before or after a sale?
I would imagine quite the opposite really.
However I would revisit the situation in a few months. The app world, especially on Android, is very much one where word of mouth rules. "What app do you guys like for managing/listening to podcasts?" Having a lot of people who now have a vested interest in this app (because they think that they got a deal on it, and that it has monetary worth that wouldn't be there if it was just a normal trial or long-term freebie) yields a lot of people who may very well promote this app.
We'll see.
This whole entry sounds a little bizarre, however. The author got exactly what they should have expected. Where is the rot? There is a unexplained spitefulness that I'm just not understanding.
Not necessarily. But then again maybe. This information is useful to me because it changes the expectation value of the outcome of that marketing strategy. Without it I'm just guessing, and laying the odds at 50-50.
He readily admits he bought into the 20%, got and clarified the 0% offer, debated and went for it. He shows the 54k number as a way of reinforcing the bait-and-switch they are using to lure people into the market, not as a way to say 'i should have been paid $x'.
You say 'Amazon gave that company an incredibly aggressive marketing campaign for 1 day' but let me tell you what i see. 'Amazon is building their market on the backs of apps by giving them away for free.' I write Android apps for a living and I appreciated the cautionary tale. The rest of the comment you left is basically unsupportable. We have no data to say what % of people that get the app for free leave a review (and, consequently, whether or not that review is good or bad). I'm guessing we also have very little insight into how the numbers of installs affect the search rankings.
You are (probably) right, there are a bunch of people that grab just the free apps, but I don't see that as a good thing and I'm not sure how it plays into your argument. Its also not clear that the 'freemium' option was offered to the developer as an alternative of putting up their full app up for free. If it was, I would have expected PopCap to do so with Plants v. Zombies.
Its also unnecessarily diminutive to say '... I have to point out that the sales BEFORE the free-app-of-the-day listing[1] were not impressive...". The fact of the matter is they made infinitely more money before the deal of the day then we can say they did AS A DIRECT RESULT of the deal of the day listing.
I appreciate the response. I'll try and address each thing you mentioned.
--------------------
but let me tell you what i see. 'Amazon is building their market on the backs of apps by giving them away for free.'
--------------------
This company's app uses a simple software model. You pay $1.99 and you get their app. Your comment decries the entire Amazon model as benefiting them and not the developer.
I don't agree with this and here is why... let's say this company had a subscription-based app or some in-app-payment-enabled app. Suddenly it is on 101k new devices and let's say that 5k of them (5%) buy some simple subscription or even less, some 1-time-in-app-micro-resource inside the app for $.99.
Now suddenly this blog post has a very positive tone to it and the developers are praising Amazon for such a progressive app sales model and we are all here nodding our heads about how awesome it is and you and I are high-fiving each other over Skype Video because we are so excited.
The Amazon model isn't broken and it's not building a market on the backs of its developers. It can be an aggressive, mutually-beneficial relationship if both parties are prepared to take advantage of what Amazon has to offer. These guys weren't ready for that yet, but I am willing to bet dollars to donuts that come this time next year they will have a new app back in Amazon App Store, ready to do the 1-day-free-giveaway AGAIN, but this time they are going to be prepared to take advantage of all the traffic.
----------------------
Its also unnecessarily diminutive to say '... I have to point out that the sales BEFORE the free-app-of-the-day listing[1] were not impressive...". The fact of the matter is they made infinitely more money before the deal of the day then we can say they did AS A DIRECT RESULT of the deal of the day listing.
---------------------
I agree that my comment came off way too demeaning and I didn't mean it that way. I was getting carried away with making my point that from a sheer-number-of-device-installation perspective, they went from a trickle of water to a firehose in one day and that isn't a bad thing.
I don't get that. It's just a deal. They could have said no. The rules of the game are clear. Amazon can make your app free unilaterally, but you'll still get 20%. Or, you go into any arbitrary mutual business agreement with them to guarantee that your app gets promoted, at the cost of lower/no revenue. I found the fact that the latter exists informative, but in no way threatening.
My take from this whole thing is that in the technology industry, people are not used to making business deals and get scared when they do.
Why does it have to be "threatening" to be newsworthy?
The complaint seems to be that Amazon is talking out of both sides of their mouth. Telling the public that developers are getting 20% (thus making people feel good about installing the free app) then asking developers to agree to a rule change and accept nothing instead.
Note: Sales did not pick up after the free app sale. Therefore that free app sale was actually a waste of time. Furthermore their app requires a server to run, since its not a subscription-based app the server is 100% on their backs. They now support 100,000 unpaid customers with a server, and ALL those customers are going to cost them in the long run.
Amazon further moved by reducing the price of the app for 3 days without consent and modified description of the app.
TL;DR = sales on amazon are for profits of amazon only, get their numbers up but provide no real value for clients. They developer makes more money selling 10 apps a week than having the promotion which permanently harmed their revenue.
Both of those actions were consented to in the agreement the company entered into with Amazon.
Amazon always reserves the right to do whatever they want period. Its not your product, you are now an amazon employee with the right to quit.
It's not just that, the app would've got in front of much more than 101K people for that many to download. Maybe a couple of million?
Looks like this strategy is:
1. Good for apps with ads or in-app purchaes. 2. Bad for apps that need server infrastructure on the backend.
Not all apps are like that. Since the app failed both the above categories, they shouldn't have agreed to the terms.
Other apps might be enjoying the attention happily and making money, I don't see anything 'rotten' about that.
"How many reviews may be a half to a full star higher because the app was free and there isn't that feeling of being owed value by the reviewer because they got your app for free."
Breaking a rule, I cannot currently post direct references, I hope someone either corrects or bolsters this:
I have read at least one peer-reviewed study showing that people generally see a free service/item as having less value than one that costs some X $ amount. Perhaps that doesn't translate to how they feel about the quality of that service/item, but I think your assumption about the reviews being susceptible to an extra half point is not well founded.
I don't think that study and those results apply here verbatim because this is more the Groupon model than the "cheap service" model.
I am, for a VERY limited time, getting a product for free. The perception of value is much higher (because of the time limit) than if I were downloading an always-free product or a really cheap product.
I think the success of Groupon, effectively using the same pattern of attraction, would indicate that people DO perceive a huge value from an extreme sale/giveaway like this for such a short period of time.
I'd also argue that the sheer volume of downloads (100k vs 20 the day before) would also support that claim.
Neither point perfectly scientific and conclusive, but I felt collectively the supported my position.
I have visited the FAD page right around midnight pacific (when the free app is revealed) every day since it was first introduced in March. A few apps start with no rating, but most have 4- to 5-stars. By the end of the FAD promotion (the free-day,) I've observed at least half of them go below 3-stars. The only ones that have gone up are the ones that had no rating to begin with. Many, but not most, do recover some of their rating. I've yet to see an app (that I recall) which regained its previous high.
My understanding, and I don't have any link to really support this, is that Groupon customers are some of the most demanding, selfish and entitled gits out there. If Groupon is so great and customers are so thrilled at getting a premium thing cheap, why do more than half of merchants say they wouldn't do the promotion again?
http://www.businessinsider.com/groupon-survey-results-2011-7
You say Groupon is successful? You're right, but pretty much only for the customers [ab]using it. Groupon loses money at an alarming rate...
http://www.minyanville.com/businessmarkets/articles/groupon-...
Your logic is really flawed when you say "I'd also argue that the sheer volume of downloads (100k vs 20 the day before) would also support that claim."
It supports the claim that people like free stuff. Once a year IHOP does a free pancake deal for charity. On those days they see roughly 50 times more customers than on a typical day. By your logic, people perceive pancakes as a huge value.
I will concede that point as everything you pointed out are solid arguments against it and well reasoned.
Thank you for the detailed reply.
When users grab an App for free, they leave worse reviews in aggregate, nearly every time. In the mobile marketplace, people who have to spend money to buy Apps normally have money, and often have jobs, which sometimes means they're adults, which occasionally means they act like adults when they decide to review an app they decide to spend money on. People who download apps for free often decide to act like privileged little brats and berate an app for any feature they perceive that it should have but which they fail to find (regardless of whether said feature exists in the app). They leave poor reviews and don't factor "value" into the equation because all they ever download are free Apps and they expect nothing less than Angry Birds every single time.
There is a big difference between paying for 100k of paid users marketing campaign and getting 100k free users. When you pay for a campaign you know the amount you target and are willing to spend. From that you know what the expenses will be.
The free campaign meant 100k users unexpectadly got the app, then normal everything continued. Point being that 100k people like a free app. Angry birds was already popular prior to Amazon Store.
So the question is that did the free day give ANYTHING to any developer, lets assume zero server costs. Did the app give anything? The app benefits amazon because people use amazon store vs google store, the 100k users = user outreach, server infrastructure, damage control, reaching out to users to rate, etc. And for the day you devalue your app making paid customers feel stupid for not waiting.
These secret back-door deals that were so secret that they were written in bold in the email, so secret that they noticed this and wrote back to amazon, and so secret that amazon then confirmed them.
They were offered a crappy deal, realized this and double-checked it, but decided to go for it anyway. When it turned out that the deal really was pretty crappy, they then act surprised and self-righteous and blog about it.
Secret to the masses, not the parties involved. Yeah, its bold, but its bold in an email between two parties where they agree upon terms contrary to the public terms.
Consequently, many people are under the impression that when the download the free app of the day, they are doing the devs a favor and earning them 20% of their list price, and I have absolutely seen people in public forums run around advertising when an app from a dev they like is a free-app-of-the-day, telling people to help support said developer by downloading the app even if they don't really want it because said developer will receive some financial support from the download.
The fact that all of the above is bullshit and that Amazon has been secretly negotiating that down to 0% of the list price with the admonition that the developers cannot tell anyone they aren't getting the 20% everyone thinks they're getting tends to indicate that Amazon is aware of this confusion and exploiting it for their own gain.
Do you seriously imagine that members of the public are attracted to the Amazon Android App Alliteration Store because they think Amazon is a more charitable and supportive firm than Google, and shows greater kindness to the ramen-chewing developer? I feel pretty comfortable in asserting that the vast majority of people don't give two hoots about what arrangement exists between publisher and distributor. Do you go to the movie theater and decide to watch a Universal film because their producers are nicer than the ones at Paramount? Do you grade other products/services you buy by the providers' corporate social responsibility score, or the credit terms extended to their suppliers? Of course you don't. With a few exceptions (mostly symbolic) you are wholly ignorant of such things, and rationally so. You assess products and services based on whether they fill your needs at a reasonable price.
I don't run a whole lot of apps and as a result have not got around to using the Amazon store, but non-industry members of my social circle have mentioned that there's 'a free app every day' there. I suspect that if I asked what return they think this nets for the developers of said apps they would just give a me a funny look.
Many people do go out of their way to support independent musicians or indie game makers. It's not unreasonable to believe that there are people who want to help support small mobile development shops.
"A broader userbase" that doesn't pay anything isn't "help" by any stretch of the imagination for a number of business models.
They certainly derived value from the transaction. By giving away a free app a day, Amazon drives customers to its marketplace, and its brand. To suggest that Amazon's intentions are purely altruistic is naive.
But I do think it is exaggerating to say that "everyone downloading the free app is harboring illusions that they're supporting the developer."
I strongly suspect that the overwhelming majority of downloaders get no further than "ooh! free stuff!" click
I pay pretty close attention, and I thought the free apps of the day were paid at the 20% rate that Amazon warns they may pay you if they unilaterally discount your app.
The fact that the email from Amazon had bold text is irrelevant. If Apple advertised 70% going to developers but then sent you an email saying "hey, we'll put you on our featured app page if you agree to (a) accept 35% and (b) don't tell anyone about it" would that be secret? What if they bolded it?
That doesn't seem great.
Holding apps hostage -- not being able to choose unilaterally to remove them -- is beyond the pale.
Whose app is it anyway?
Does Amazon think they own these things the second they get uploaded?
"What is the payment structure between Amazon and me? Amazon pays developers 70% of the sale price of the app or 20% of the list price, whichever is greater."
https://developer.amazon.com/help/faq.html#Sales, Payment and Tax
That's clearly the bit the author was referring to as being deceptive: in public they state that developers will always get at least 20% of the list price (which leads some people to think developers still get paid when their apps are listed as free), but in private they ask developers to take 0% of the list price when they promote the app as the "free app of the day."
> Did the exposure count for much in the days afterwards? That’s also a big no, the day after saw a blip in sales, followed by things going back to exactly where we started, selling a few apps a day. In fact Amazon decided to rub salt in the wounds a little further by discounting our app to 99 cents for a few days after the free promotion.
Well here is the image with sales numbers from the day after.
What I'm seeing is a a huge sales/profit increase; $300 that day as compared to <$50 before. Full discloser, i.e. sales from the subsequent days, would be very nice to see at this point.
Next logical step? You have a >100,000 user base so push an update to the free app so that it now includes ads.
The tone of the article feels like the author is just upset he didn't get his way- "I was against putting the app on Amazon and my partner was for it"- so now he is trying to make himself appear "right". It's called pivoting.
The problem is, the users who got it when it was free got the PAID version, so they can't push an update to the people who got it for free without making all the users who ACTUALLY paid also get ads.
They'd also have to add ads to the paid Google Market version, since the Amazon dev agreement requires that you keep app versions synchronized across all app stores. Amazon has basically put them in a position where they can only lose money or piss off their actual paying customers.
TBH both parties are at fault. Them for not reading the letter Amazon send WORD FOR WORD and not Amazon for discounting their app to 99cents the day after.
Now, in the Amazon AppStore, perhaps the larger publishers will eventually be able to set a minimum price. The prices are already so low but better than zero.
I love Amazon's FAAD, and I feel safe downloading any app from Amazon while the Google market is more strip mall than indoor mall. The new Market app is a major improvement though but I am anxious to download let alone buy anything with less than 250k downloads.
If Amazon is correct, though, this promotion should mean that post-promotion sales are higher than pre-promotion sales. But the chart ends on the day of the promotion. Though there's a little text about it, I'd be curious about more detail on how things are shaping up afterwards.
Either way, up to them of course, but it feels a bit extreme to me to abandon ship because of agreeing to an unsuccessful promotion and because they're behind in features vs. the Google market.
If you give an app away, you should build in some monetization.