April 10, 2012, 5:17 PM

Amazon helps app developers make money from their apps

With easy in-app purchases, Amazon looks to lure more app developers to its app store.

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Amazon.com Inc. knows that for its Kindle Fire tablet to compete with Apple Inc.’s iPad, there must be many games and other appealing apps that run on the Android-powered Amazon tablet in its Amazon Appstore for Android devices. App developers, on the other hand, want to make money from apps. Today, Amazon announced a way to help both parties reach their goals.

Amazon has launched an in-app purchasing service, enabling app developers to sell digital content and subscriptions from within apps and games. While that move alone will likely help more developers warm to Amazon’s Appstore, what might further draw them in is that the system uses Amazon’s 1-Click purchasing—a one-step payment method already used by millions of consumers on both Amazon’s and other merchants’ mobile sites that allows them to connect with stored payment and shipping information for fast mobile purchases.

“Amazon Appstore’s In-App Purchasing service enables developers to generate more revenue from their apps,” says Aaron Rubenson, director of Amazon Appstore. “In-App Purchasing is simple to integrate and gives developers access to millions of Amazon customers who are already familiar with Amazon’s 1-Click payment system. Many of Amazon Appstore’s customers have shopped with Amazon before and they trust Amazon’s easy payment process, which leads to higher conversion of developers’ in-app content and subscriptions.”

Amazon’s In-App Purchasing is available for apps that work with Android devices—including Amazon’s Kindle Fire tablet—but also smartphones using Google Inc.’s Android system. App developers, including Disney Inc. and publishers CondéNast, Dow Jones and New York Post, have been testing the program. 

 “Amazon’s In-App Purchasing solution created a great way for us to reduce friction and drive more revenue from our games, as millions of people already have Amazon accounts,” says Michael Ritter, senior vice president of licensing and distribution at Social Gaming Network, which was involved in the pilot. “By enabling in-app purchases we are able to be more flexible in pricing. We can release free games, provide updates and enhancements, and continue to monetize.”

In-app purchasing is an increasingly important tool for app developers looking to make money from their apps without scaring off consumers with large upfront purchase costs, says Avi Greengart, research director, consumer devices, at a mobile hardware and telecommunications research and consulting firm Current Analysis Inc. “With this announcement, Amazon is rectifying a competitive disadvantage,” Greengart says.

Tom Nawara, vice president of emerging solutions and innovation at online and mobile marketing firm Acquity Group says Amazon's announcement is a must-have for them in order to compete with both Apple's App Store and Google Play. Google Play is Google’s recent attempt to better compete with Apple’s iTunes and Amazon’s digital offerings by repositioning all of the digital content it sells into one store.

 “App developers will benefit from the sheer amount of customers with existing Amazon accounts that will be able to immediately use the 1-Click payment system,” he says. “The revenue model for many app developers is migrating toward a freemium model where an initial product or service is provided for free, but premium add-ons cost the user money. This move will make it possible for those developers to offer their apps via Amazon.”


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