Amazon Has Its Own Groupon-Type Horror Story

Queue

Amazon’s free app of the day and Groupon have one thing in common — they both convince businesses to give away their goods at a discount in exchange for exposure. We’ve already heard a fair share of Groupon horror stories, and now come a similar, or worse, tales from the Amazon Appstore.

Why worse? While Groupon pays its merchants a cut and Amazon promises a 20 percent cut for app developers signing up for its “free app of the day” offer, it’s made a special offer of 0 percent to at least one developer, ShiftyJelly. In other words, ShiftyJelly will not receive a single cent no matter how many copies of its app Amazon distributes for free.

The offer e-mail:

As you may already know, the Free App of the Day offer placement is one of the most visible and valuable spaces on the Amazon Appstore. We would like to include your app “[name removed]” in our Free App of the Day calendar. We have seen tremendous results from this promotion spot and believe it will bring you a great deal of positive reviews and traffic. It is an opportunity to build your brand especially in association with a brand like Amazon’s. The current price of this placement is at 0% rev share for that one day you are placed.

After much consideration, ShiftyJelly accepted the offer and had successfully, er, “sold” over 100,000 copies, making $0 instead of the $54,805.14 a 20 percent royalty would have equaled. Says its blog:

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.

It’s really not only about lost revenue, but also the increased cost to maintain its server.

To add insult to injury Pocket Casts relies on a server to parse podcast feeds (allowing instant updates on your phone), and all these new users forced us to buy more hardware just to meet demand. Hardware that we are going to have to support indefinitely at our own cost.

Is Amazon really at fault here?

Just like business owners whose Groupon campaigns crash and burn, ShiftyJelly has to take part of the blame for its poor business decision. It explicitly understood and agreed to the terms laid out by Amazon, and so knew its app would be downloaded by a massive number of users — resulting in the extra load on its servers while making no money.

But what makes Amazon look bad is its false promise of a 20 percent fee for developers when it’s really not paying a cent. What’s more, it can change the pricing and description of apps in the Appstore as it pleases.

Amazon gets to set the price of your app to whatever they want, without any input from you, or even the chance to reject their price.

Amazon re-writes your description, and in ours they even made up things like ‘add up to 100 podcasts’. No idea where on earth they got that number from.

Source: ShiftyJelly
Photo credit: Saxon

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