BACK IN AUGUST Amazon announced a major revamp of its App Store, including a new feature, Underground. The service has seen popular games and apps become free of charge right down to the removal of in-app purchases, which in games like Angry Birds and Cut The Rope is quite a big deal.
Basically the Underground model sees Amazon pay the developer for every minute a user is on their app, at a loss.
At the time, we scoffed rather loudly. Amazon had been very quiet on the launch and at first glance it sounded very much like a licence to spy on users, for whatever reason. This week, the service saw a full launch across Europe, bringing the first real alternative to the current app economy. So ever suspicious, we wanted to know where the catch was. Is Amazon disrupting the paradigm for the sake of improving the lot of small-time developers? Is it making life better for users? Or is it a big bucket of spyware-ridden snake oil?
Last week, we were able to chat to Aaron Rubenson, the director of the Amazon App Store and get the facts first hand. He explains, "About a year ago we were talking to customers, developers and the like, and each was telling us their concerns about the apps market segment in general. On the customer side we heard that there are so many apps and games out there it's difficult to know which ones are of good quality and which are worth spending money on. Most customers know the top developers but then it falls off very rapidly.
"We also heard frustration with the freemium model. Some developers told us that they would rather charge upfront, and for those that had adopted the freemium model found that only two to three percent of customers actually purchased, which makes it hard to make a profit. Somehow the industry had evolved to the point that for content creators it had become a difficult place."
There are now over 1,500 apps that are either given away free in the Underground store, or had in-app purchases which have been removed. Iconic titles such as Cut The Rope and Angry Birds have taken to the model and the new tie-in Star Wars game Knights of the Old Republic, which costs £7.78 in the Google Play Store, is free in Amazon Underground. Even business utilities such as productivity suites are offering premium editions for free.
So how do developers get paid? Simple. They're paid for every minute a user spends on the game. The longer you're playing, the more the developer makes.
"Developers like this model because you now have 100 percent of customers making money for you - and they're doing it for the entire lifecycle of the app instead of one payment upfront. It makes developers more motivated to keep updating products because they can drive more engagement," Rubenson explained.
What we haven't heard yet is what's in this for Amazon. It's very rare that multinational e-commerce giants give away something for nothing. But in fact there are no cuts being taken, Amazon is literally paying to give apps away. Why?
"This is good for Amazon in a couple of ways. Firstly, this is also the Amazon shopping app. We hope people engage with Underground often and when they do, discover the other great things that we offer and some will go on to buy other goods. There's a lot for us in driving high frequency engagement with the mobile channel. The other way is that when customers download apps and games, occasionally we'll show an advert. They're before the start-up sequence, they never ruin the flow of the game, its not often, but that's another way."
Presumably of course, this means that they have to be in some way mucked about with in order to add a way of monitoring usage. But there's no API, no alteration to the code, it's all done at the Amazon end. Which means that everyone involved needs to trust Amazon.
"When we ingest the apps, we add a very small wrapper which handshakes to the Underground app, and that's how we aggregate information on users. For Underground, we take one piece of data, which is one anonymous aggregate of time spent on the apps. That's it. We take privacy very seriously both in Underground and in Amazon as a whole."
But what if people don't want to be monitored, even anonymously? Let's face it, Microsoft hasn't exactly got the balance right in Windows 10 yet.
"When we launched Underground, we also added a setting to opt out of data collection. If they do, we can't let them use the free apps and games, but we recognise that some people won't want to share that data even anonymously."
At worst, Amazon Underground is a fascinating experiment that proves that in the digital economy, there are alternatives to the traditional app sales methods. At best, it's a genuine alternative for developers who don't want to get caught up in the mechanics of running a business, but want to make a living. At the moment, it sounds like Amazon are serious in making it a loss-leader that drives sales through other channels.
We're reasonably comfortable with the idea that Amazon is adding the 'wrapper' for benign purposes. After all, it's very difficult to get most things to work without sharing a little bit of metadata. What we'll be watching for is if Amazon ever finds a way to capitalise on the data being collected. That's when a fairly Utopian market disruption would become a dystopian nightmare. µ
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