Amazon simplifies revenue split from paid apps, drops two-tiered system

By Kathleen De Vere Comment

Amazon is simplifying how it shares revenue with developers of paid apps in its store. As of July 1, developers will earn 70 percent of the list price of every paid app sold in the Amazon Appstore.

The move brings Amazon’s payments policy in line with the 70/30 revenue split it earns on in-app purchases, and matches the rates developers get in Google Play and the iTunes App Store.

Previously Amazon spit the revenue for paid apps in one of two ways — developers would either earn 70 percent of the sale price of an app, or 20 percent of their requested price, whichever was higher.

Although the original pricing terms were positioned as a way for developers to still earn revenue if Amazon put their app on sale or made it free as part of a promotion, the policy was not without its critics. In April 2011 the International Game Developers Association warned its members against selling their apps with Amazon, arguing that the two-tiered pricing structure was designed to attract consumers at the expense of developers. Later that year Australian developer Shify Jelly reported Amazon did not pay out the promised 20 percent share of their app’s original asking price when the app was made free as part of the Amazon Appstore’s Free App of the Day program.

According to Amazon’s updated Mobile App Distribution Agreement, the company does not pay developers any royalty share if the price of an app is $0.00, which means developers won’t earn anything if their apps are featured as a Free App of the Day. However, under the new terms it appears developers will still earn 70 percent of an app’s original list price if Amazon decides to discount the app. We’ve reached out to Amazon for clarification on this point.

The new royalty terms for the Amazon Appstore are as follows:

  • Royalty. For each sale of an App before July 1, 2012, the Amazon Party that made the sale will pay you a royalty (“Royalty”) equal to the greater of (i) 70% of the purchase price or (ii) 20% of the List Price (defined in and subject to Section 5i) for the applicable Amazon Marketplace as of the time of purchase. For each sale of an App on or after July 1, 2012, the Amazon Party that made the sale will pay you a Royalty equal to 70% of the List Price for the applicable Amazon Marketplace as of the time of purchase. No Royalty is payable for Apps with a List Price of $0.00. Taxes and any separately stated fees or charges are excluded from the purchase price and List Price when calculating Royalties. A Royalty is due only for sales for which we have received final payment from or on behalf of an end user. If an App is purchased using a credit card or bank account deduction mechanism, final payment will be deemed to have occurred when the applicable credit card company or bank has fully settled the payment for the applicable purchase.