Amazon turns on in-app purchasing for its Appstore apps

Amazon (s amzn) is turning on a key money-making tool for developers in its Appstore for Android, letting app makers offer in-app purchase through Amazon. The service, which has been in testing recently, allows developers to easily sell in-game currency, upgrades, content and magazine issues with one click, helping developers, especially makers of freemium apps, pull in substantial revenue.
As we’ve noted before, in-app purchase has become a huge monetization tool for iOS (s aapl) and Android (s goog) developers, who are increasingly turning to freemium models to make money. By turning on its own in-app purchase system, Amazon can continue to tout its app store as a great place to make money. Developers for the Kindle Fire will have to use Amazon’s in-app purchase system while non-Kindle Fire apps sold in Appstore for Android can make use of other payment systems. But with Amazon’s easy one-click system, which takes advantage of millions of credit cards on file, developers should be able to expect a good return for incorporating Amazon’s in-app purchasing API.
Amazon developers will get 70 percent of the revenue from in-app purchases, the same as Apple’s App Store. Even if Amazon discounts the in-app purchase, developers still get their same cut of the list price. That’s an important distinction because Amazon got flak from developers for the way it was allowed to control the price of app downloads in its store.
Flurry recently took a look at in-app purchasing systems from Apple, Amazon and Google and found that Amazon’s system generated 89 percent of revenue per active user compared to the best performer, Apple’s App Store. That put it well ahead of Google, which had just 23 percent of the average revenue per active user compared to Apple’s App Store.
Michael Ritter, senior vice president Licensing & Distribution at Social Gaming Network said in Amazon’s blog post that the fact that Amazon has millions of customer accounts and has a very simple check-out system encourages in-app purchases. That’s been a problem for in-app purchases on Google Play because many people still haven’t set up payment accounts. Perry Tam, CEO and co-founder at Storm8, said his company was able to increase revenue by tenfold within two months for a test game. Within two weeks, Store8 had four of the top five free apps in the Amazon Appstore, Tam said.
With 34,000 apps, Amazon still has a much a smaller app store compared to the iTunes App Store and Google Play. And it received some early criticism last year for the way the store worked. But with the launch of the Kindle Fire, which relies on the Amazon Appstore for Android for app downloads, the store has helped more developers make some serious money. Developers have been saying because of Amazon’s slick buying process, they’re seeing real growth on paid downloads, something Google Play is still not known for. Now, by adding in-app purchase to the mix, Amazon can appeal to not just developers of paid apps but also free app makers.