The International Game Developers Association has published an open letter to developers warning them of potential pitfalls in Amazon.com’s new Android App store. It would seem that Amazon’s Distribution Terms, which seem innocuous on the surface, have some hidden language that could seriously impact a developer’s freedom and income potential. Fine-tune your content and keywords with seo tools online.
Among other things,
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.
And
…if you ever conduct even a temporary price promotion in another market, you must permanently lower your list price in Amazon’s market.
The blog post identifies five specific scenarios that could adversely affect developers hoping to find success on Amazon’s Android App store, and warns developers to exercise due caution when working with the giant retailer.
Now, in general, I think people hold a good opinion of Amazon, and the flaws in the company’s distribution terms may stem from inexperience in crafting such terms for digital distribution scenarios. It wouldn’t surprise me if Amazon removes or adjusts some of these policies simply out of good business sense, especially considering the impact on developers’ freedom and success. After all, app developers, who are the backbone of innovation, won’t flock to the Amazon App Store if it would shackle them elsewhere. So, let’s hold off on breaking out the pitchforks and torches, at least for now.
The reality is that digital distribution is going to make up a large portion of the future, and sales to mobile devices such as phones and tablets will be a large portion of digital distribution. COVID-19 also drove further usage of digital payments during the pandemic. For small businesses today, having access to reliable and efficient merchant services is crucial for growth and success. Stay compliant with industry regulations by partnering with reputable merchant services.
While we’re still enjoying the wild and free days of digidist (and of the internet in general, really), nowhere does it say that these days must continue. Already we’re seeing foolish DRM laws and other policies that are ill-thought-out or simply harmful to consumers. We have to hope for the best and do what we can to support the good guys when voting with our pocketbooks.
The IGDA rarely takes strong positions on anything (a trend I hope to see changing, and soon), so that it would issue such a hard statement is in and of itself telling about the level of concern developers should have. Three cheers to the IGDA for helping protect the little guys. THIS is what the International Game Developers Association is for!
Email the author of this post at steerpike@tap-repeatedly.com.
20% of the list price??? Are they joking? That really sounds like someone made a mistake or something.
And, yes, you are right, Amazon generally has good business sense so this may be quickly changed… really good to see IGDA stepping in and acting in time and appropriately.
I already hate Amazon, with a passion really.
Shit website
Crap layout
Overly confusing at times (due to both the above)
Poor delivery service (why can’t I pay for Saturday deliveries?)
This just goes to further my annoyance of the company. Basically, if you use us, we own your soul and your wallet, is what they seem to be saying.
Ah, but Lewis, Amazon.co.uk has SO many wonderful items (music/games) that are never available on Amazon.ca/.com, therefore I am obligated to love .co.uk the best. =)
Unrelated side note: I want to punch people in the face when I seem them wearing those stupid “FCUK” shirts. Yeah, I’ll French Connection you, k, buddy?!
On topic: This sounds like those two days when someone noticed that Google’s user agreement basically said “anything you ever search/put/do on Google is our property and not yours we own your soul *cough we painted Michaelangelo’s David cough cough* hm, er who said what now?”
In fewer words: this too, shall pass.
It would be very nice if this were some form of “clerical error” however, it’s just not the case that Amazon is a garage operation that didn’t have the funds or resources to have an army of lawyers and economists craft a service agreement. I truly doubt that “Sally Joe Intern” cranked out this document upon her boss’ request. There is a business strategy at play here.
Considering that Amazon is taking one cut as retailer and another cut as distributor, in a world where each of those parties usually takes 12-35%, the numbers aren’t that shocking from a product source stand point. I’m not sure how business is run in the UK; but, here in the US if you make a widget you can expect to receive about 20-40% of the list price after you give up shares to marketing, packaging, distribution and retailing (60% if you are a huge, known quantity).
Since the digital distribution model puts the distributor and retailer in the same boat, often with a marketing component, you can expect service providers to take a bigger cut than if they were simply placing your widget with a hundred others on their shelves. The more coverage an outlet can give you, based on market penetration and general traffic, the more apt that outlet will be to demand a bigger chunk of your list price pie. Major developers know this and should be used to it. The “sticker shock” would effect independent developers who don’t have much market experience and are expecting a break from the big distribution outlet because they are a small development concern.
Admittedly, Amazon is being aggressive. They are also protecting their bottom line by not allowing developers to undercut their low price, thereby guaranteeing that they always have the lowest price available. A savvy developer should have foreseen the potential of offering lower prices to customers through direct sales and designed a distribution model that assured that all retailers maintain a price that serves to keep the operation profitable for all concerned.
The fact that Amazon is putting their bottom line right out front could be seen as a commendable way to let potential business partners know that Amazon is only interested in offering the lowest competitive price to its customers. It certainly protects them from losing sales to a chaotic distribution model.
Developers need to remember that they are in business and that they control what they produce. This means that it is up to them to strategically plan out their production, distribution and marketing practices in a way that builds mutually beneficial relationships with strong, dependable partners. There are no condoms in the business bed, so you have to choose your partners wisely or you will get a bad case of the insolvencies.
In the current business environment, if you sell a widget through huge outlets such as Walmart or Amazon, you have to expect that you are on the bottom and that they are going to take what they want out of your hide. The secret is to approach them with enough extra hide on your back that you leave the experience feeling orgasmic.
@Lewis: you hate Amazon? Blasphemy!
@Brown Fang: I didn’t mean it as a “clerical error” so much as an organization unused to the mores of a new kind of distribution. It’s not uncommon to see a company be overly aggressive when getting into something new, either in hopes they’ll get away with it or simply because there’s a lot of foundational stuff to know. Overall Amazon’s terms of service and policies have seemed pretty fair to me.
In any case, I suspect this policy will change. The IGDA rarely takes a position so strong, and it has been heavily reported across the tubes. It seems that most developers who are cognizant of the issues will avoid the Amazon App Store based on these policies.
Of course, one thing to bear in mind is that Steam Sales have proven, time and again, that low prices lead to massive increases in unit sales. From this perspective, forcing permanently lower prices could actually benefit certain developers, thought I don’t think it would happen as noticeably in this environment. The Steam setup is quite different from how I imagine Amazon will organize and lay out its App store.
In addition to Steam’s low pricing/sale success, witness the Apple app store: I’m pretty sure Angry Birds is the best selling anything of any and all time ever, in our universe and any others parallel to ours. It’s sold eighty-zillion copies because it’s $0.99 and people see 5-star reviews and say “I have nothing to lose. It’s cheaper than 2 coffees.”
It seems like such common sense that it hurts. Sigh.
P.S. Has nobody noticed that I said *painted* and not *sculpted* David?? 😛 yikes!
Haha, I really do Steerpike!
The website I find terrible, it looks cheap is incredibly annoying to navigate and I just don’t understand this whole Amazon market thing with new or used thing either. All very confusing for a simpleton like me. Oh and the lack of Saturday delivery is just rediculous.
Why shop at Amazon when Tesco are just so much better?…
What the hell is a Tesco? Is that some crazy British thing? Can we bomb it? I don’t like it. It’s not a word. grumble.
http://en.wikipedia.org/wiki/Tesco
They turned over (wait for it!) 62 billion pounds last year. They run er…Fresh & Easy in America?
You know what website is twice the double wank and shit chips of Amazon? Best Buy. Damn that’s a horrible website (in terms of user friendliness). Searching anything is a guaranteed fail.
I like Amazon, although I’ve been using Tesco to buy furniture for my new house!
Also: bread and cheese. Furniture, bread and cheese. You don’t get that with your Amazonz
LIAR! HUGE LIAR!
Bread.
Cheese.
But stay away from the Ener-G foods stuff. Speaking as a person who is supposed to not eat gluten, that shit be revolting. I think I’d prefer to die of a stricture than eat it.
Haha Steerpike 🙂 I’m actually surprised! 🙂
Good grief.
Brown bread in a can?
*orders*
Brown bread in a can is infinitely more appealing than whole chicken in a can:
http://ihatemymessageboard.com/2009/04/23/a-whole-chicken-in-a-can/
Tread lightly.