IGDA Blasts Amazon's Android App Store

[vansau]

IGDA Blasts Amazon's Android App Store

Based on the IGDA's concerns, it's pretty easy to understand why they aren't encouraging developers to work with Amazon.

Amazon's new Android App Store has been drawing a lot of criticism, thanks to how the site's distribution terms and profit sharing requirements work. However, the International Game Developers Association has finally thrown its hat into the ring and unveiled some serious concerns about the new digital store, advising developers to educate themselves before they start submitting content to Amazon.

The IGDA's primary concern is that Amazon reserves the right to control games' prices. Not only that, but:

"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."

On top of this, the IGDA outlines five scenarios that developers will probably encounter at some point if they submit content to Amazon:

1. "Amazon steeply discounts a large chunk of its Appstore catalog (imagine: 'our top 100-rated games are all 75% off!')."

2. Be forced by Amazon never to give other merchants an exclusive promotional window.

3. Other distributors might feel obligated to duplicate Amazon's terms.

4. Amazon might steeply discount a niche title (or even make it free), thereby depriving the developer of a lot of money.

5. Amazon might also discount a top-selling title.

The IGDA's concerns seem pretty legit. As a result, it's not terribly surprising that the group has stated that it can't bring itself to endorse the site's store. The IGDA also stated that it formally expressed its concerns to Amazon, and Amazon has no interest in changing its terms.

Source: IGDA via <a href=http://gamepolitics.com/2011/04/15/igda-criticizes-amazon-android-app-store-terms>GamePolitics

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[Boemmel]

I saw that earlier and it is interesting that the IDGA singled out the Amazon App Store specifically, but the pricing and the developer share issues seem very valid to me and I think the "no exclusive promotions for other merchants" is also troubling.

I am and actually surprised that Amazon would put such harsh terms into their App Store, as they are the upstart and would need to gain developer trust and confidence first in order to compete with the Apple App Store and the Android Market. Then again, IIRC Amazon also put some pretty egregious terms into their first Kindle publishing deals as well and I do remember the backlash about that: Maybe they want to see how far they can go and would back down if enough public outcry happens or if the developers reject the Store, but we will see.

What I would like to see (maybe from the IDGA itself?) would be some sort of comparison of the terms of different App Stores: This way, developers could quickly look and compare the different terms and could then decide whether they would like to put their App into the respective store or not.

 

[GideonB]

What I would like to see (maybe from the IDGA itself?) would be some sort of comparison of the terms of different App Stores: This way, developers could quickly look and compare the different terms and could then decide whether they would like to put their App into the respective store or not.

This would be incredibly useful

 

[archabaddon]

I wish the author would have told me who the IGDA was, and why I should care who they are, without having to search for it myself; you know, a nicely-encapsulated article with some smidgen of background :/

Just saying that they're the International Game Development Association would have clued me in.

 

[Something Amyss]

I saw that earlier and it is interesting that the IDGA singled out the Amazon App Store specifically, but the pricing and the developer share issues seem very valid to me and I think the "no exclusive promotions for other merchants" is also troubling.

I am and actually surprised that Amazon would put such harsh terms into their App Store, as they are the upstart and would need to gain developer trust and confidence first in order to compete with the Apple App Store and the Android Market. Then again, IIRC Amazon also put some pretty egregious terms into their first Kindle publishing deals as well and I do remember the backlash about that: Maybe they want to see how far they can go and would back down if enough public outcry happens or if the developers reject the Store, but we will see.

What I would like to see (maybe from the IDGA itself?) would be some sort of comparison of the terms of different App Stores: This way, developers could quickly look and compare the different terms and could then decide whether they would like to put their App into the respective store or not.

The Kindle conditions were largely contested by major publishers, though and they mostly took issue with things like caps on what could be charged (It's thanks to those same publishers they can ask 20 bucks for an ebook version of a 15 dollar hardcover).

I'm wondering if the same is likely to happen here. I don't know...Is then IGDA big enough?

 

[beema]

Yeah, those conditions are lame but I don't see what the bog problem is. If someone wants to sell via Amazon, they have to are to the terms. If they don't like the terms, then they don't have to sell there. Dev should obviously be aware of what hey are getting in to, but it's not like Amazon Is leaving thos out of the conttact and later trying to sneqk it in on the sly to screw everyone.

 

[ewhac]

This link may or may not work (because Facebook is written by morons), but I wrote about Amazon's Appstore's epic fail [http://www.facebook.com/note.php?note_id=10150127605683426] a couple weeks ago.

 

[Boemmel]

I saw that earlier and it is interesting that the IDGA singled out the Amazon App Store specifically, but the pricing and the developer share issues seem very valid to me and I think the "no exclusive promotions for other merchants" is also troubling.

I am and actually surprised that Amazon would put such harsh terms into their App Store, as they are the upstart and would need to gain developer trust and confidence first in order to compete with the Apple App Store and the Android Market. Then again, IIRC Amazon also put some pretty egregious terms into their first Kindle publishing deals as well and I do remember the backlash about that: Maybe they want to see how far they can go and would back down if enough public outcry happens or if the developers reject the Store, but we will see.

What I would like to see (maybe from the IDGA itself?) would be some sort of comparison of the terms of different App Stores: This way, developers could quickly look and compare the different terms and could then decide whether they would like to put their App into the respective store or not.

The Kindle conditions were largely contested by major publishers, though and they mostly took issue with things like caps on what could be charged (It's thanks to those same publishers they can ask 20 bucks for an ebook version of a 15 dollar hardcover).

I'm wondering if the same is likely to happen here. I don't know...Is then IGDA big enough?

Honestly, I am not sure. Also, the IGDA (I always mix up those letters ) can only give a recommendation, it´s not like they can enforce anything to game developers. Still, I think it is interesting that the IGDA speaks up in regards to this matter and I think they could actually sway a few developers away from Amazons App Store.

We need to remember that the Kindle was sort of the big dog of eBooks when it debuted (and arguably still is) and Amazon was and is incredibly important for book publishers as a merchant for all book titles (including physical) so publishers opposed to the conditions had a much tougher position arguing with Amazon, as they needed them as partners at least for their physical books, which should have given Amazon favorable conditions. Still, they were changed, so clearly they were unhappy and powerful enough to get Amazon to actually modify the terms.

Now, the App Store front looks decidedly different: Amazon has to establish a foothold first and they are a newcomer into a market where there are already some competitors with strong positions. Some of the other App Stores also will not go away as long as the platform exists, as they are part of platform itself (like Apples App Store for iOS).

Also, unlike eBooks, Games had digital distribution for a while now and not only on the smartphone platform. Steam, Impulse, Direct2Drive, Xbox Live Arcade, PSN, Wii Ware etc. are already established, as are the Apple App Store, Android Market etc.as well. So developers should by now have a good feel about what terms are somewhat accepted terms of doing business in the digital realm and what is just Amazon trying to strongarm them into bad terms.

So I am not sure if big developers like the EAs of the world can and will actually get Amazon to change their terms, but again, since App Stores and digital distribution for games is already somewhat established, I think it is very interesting that Amazon thinks it can get away with trying to put harsh terms into their App Store when they are the newcomer trying to establish themselves. It could be that the lure of the buying power of Amazon customers gets the significant enough traction so that they will grow to be a big player and can actually dictate their terms to the developers, but I am not sure about that.

Nevertheless, it should be interesting to watch Besides, I cannot do anything but watch myself anyway, as the Amazon App Store is US-only for now, which makes it kinda moot for a European like me at the moment

 

[Kenjitsuka]

Just another reason to never use Amazon.
I don't even know if they ship to NL, but it's a moot point for us Europeans mostly.

 

[SelectivelyEvil13]

Android App stores need a major overhaul, both with Amazon and the actual phone-accessed marketplace. (One of) my biggest beef with my Droid is how searching for an App is like picking through a needle stack for some straw. (e.g. searching for a wallpaper app and getting 50 different "national flags" wallpapers that are individually priced!)

I would imagine Amazon alleviates some of the searching frustration, but this knock to developers makes it senseless to use anyways because, as pointed out, getting screwed somehow is a likely situation. Additionally, if one wanted to find a free app or a demo, I'm sure that would be out of the question without it being strictly a promotion that is not the wishes of the developers.

 

[Xanthious]

I like the daily paid app they give away for free but beyond that I don't have much use for the Amazon App Store.

 

[domicius]

So, basically Amazon will pay a developer 70% of what they got from the customer, and never less than 20% of the original price (even if they themselves give it away "free").

And this has the IGDA's knickers in a twist?

I'd understand if they took exception to the 70% or the ability of Amazon to determine price, but they don't mind. Instead its the "minimum price guarantee" that gets them upset.

The mind boggles.

(disclosure - I buy stuff from Amazon and know how to calculate the greater of two numbers).

 

[Boemmel]

So, basically Amazon will pay a developer 70% of what they got from the customer, and never less than 20% of the original price (even if they themselves give it away "free").

And this has the IGDA's knickers in a twist?

I'd understand if they took exception to the 70% or the ability of Amazon to determine price, but they don't mind. Instead its the "minimum price guarantee" that gets them upset.

The mind boggles.

(disclosure - I buy stuff from Amazon and know how to calculate the greater of two numbers).

No, I am pretty sure the IGDA is most worried about Amazon freely determining prices without the developers consent and also having a "no exclusive promotions in other stores" which in combination can be pretty vicious. The articles make that very clear as well, I think.

I think the view from the IGDA here is more long-term, as Amazon setting prices freely without developer consent and then having that 70/20-rule would assume to me a race to the bottom on pricing. Amazon might get marketshare that way, but developers might get less revenue if the numbers do not scale up.

Example: Take an App that a developer makes, it costs 10 bucks. Lets say, there are 10.000 people willing to buy your app for that price. Now you have 100.000 Dollars and after the Store takes their cut of 30%, the developer now has 70.000 Dollars revenue. That 30% is pretty standard, so it could be Amazon App Store, Android Market or even the Apple App Store.

Amazon now discounts it according to its terms without developer consent to say, one dollar. Suddenly, there are three times as many people willing to buy your app, so 30.000 people buy it for a buck, so you have 30.000 Dollars. Now 70% of that would only be 21.000 Dollars, but since Amazon gives you either that or 20% of the original price, whatever is greater you get 60.000 Dollars that way , as that would be 20% of the original price times 30.000 units sold.

Now Amazon just generated 30.000 App downloads instead of 10.000 App downloads and so had a much bigger number of App downloads, thus generating marketshare. But the developer would have been better off with the original price, as he would have 10.000 Dollars more in revenue.

Yes, lower prices work if they get offset through volume (basic economics), but neither the developer nor Amazon can foresee if the volume really is sufficient to offset the losses of the lower price. Amazon is happy regardless, as they generate marketshare and gain a foothold into the App Store market. But the developer loses some freedom and choice here and long-term, if Amazon gets really big in the App Store business, they might put even more onerous terms into their agreement, which the IGDA also sees as troubling.

Finally, the "no exclusive promotions elsewhere" thing is also unusual and something only Amazon does (AFAIK). That means whenever you do a promotion somewhere else, you have to adjust your prices on the Amazon App Store as well. The kicker is, in other Stores, the developer can set prices as he wishes, so something like "Birthday Sale: 50% off this weekend" can be done easily. But on Amazon, you actually do not set the prices, remember? You only can set the list price and although the articles are not entirely clear about it, in my understanding you cannot raise list prices again, so your promotion becomes more or less permanent. Again, this is not verified as I have not read to corresponding passage of the Amazon App Store agreement, but if true, that would make outside promotions pretty much impossible for developers and thus giving them less leverage with other stores while depriving them of promotional marketing tool as well and be a pretty big accelerator for the race to the bottom too.

To be very clear: the IGDA has no real authority over game developers here (they also acknowledge that) and I have no horse in the race as I am not a developer nor a smartphone user (well, yet . But I think the IGDA did raise interesting points and I am curious to find out why Amazon as a market newcomer had such harsh terms in their agreement. Finally, I think it should be every developers duty to check those agreements carefully before submitting Apps if they do not want to be screwed later on by the terms and conditions. This is not limited to Amazon, but to all App Stores: They all have their little odds and ends which you have to watch carefully.

 

[domicius]

No, I am pretty sure the IGDA is most worried about Amazon freely determining prices without the developers consent and also having a "no exclusive promotions in other stores" which in combination can be pretty vicious. The articles make that very clear as well, I think.

I think the view from the IGDA here is more long-term, as Amazon setting prices freely without developer consent and then having that 70/20-rule would assume to me a race to the bottom on pricing. Amazon might get marketshare that way, but developers might get less revenue if the numbers do not scale up.

Marketshare is counted in revenue, not unit sales. I realise that this pokes a hole in the following argument, but I'll bear with you.

Example: Take an App that a developer makes, it costs 10 bucks. Lets say, there are 10.000 people willing to buy your app for that price. Now you have 100.000 Dollars and after the Store takes their cut of 30%, the developer now has 70.000 Dollars revenue. That 30% is pretty standard, so it could be Amazon App Store, Android Market or even the Apple App Store.

Amazon now discounts it according to its terms without developer consent to say, one dollar. Suddenly, there are three times as many people willing to buy your app, so 30.000 people buy it for a buck, so you have 30.000 Dollars. Now 70% of that would only be 21.000 Dollars, but since Amazon gives you either that or 20% of the original price, whatever is greater you get 60.000 Dollars that way , as that would be 20% of the original price times 30.000 units sold.

Now Amazon just generated 30.000 App downloads instead of 10.000 App downloads and so had a much bigger number of App downloads, thus generating marketshare. But the developer would have been better off with the original price, as he would have 10.000 Dollars more in revenue.

First off, Amazon just threw away 30,000 USD. Since they lose money in this pricing scenario, there would have to be a reason to do it. Very few exist beyond promotion (e.g. 1 day promotion).

Yes, lower prices work if they get offset through volume (basic economics), but neither the developer nor Amazon can foresee if the volume really is sufficient to offset the losses of the lower price. Amazon is happy regardless, as they generate marketshare and gain a foothold into the App Store market. But the developer loses some freedom and choice here and long-term, if Amazon gets really big in the App Store business, they might put even more onerous terms into their agreement, which the IGDA also sees as troubling.

Maybe they do, maybe they don't. Chances are they don't - if you look at how over time they've actually opened up their business to allow other sellers to compete with them on price for items (for example books).

Finally, the "no exclusive promotions elsewhere" thing is also unusual and something only Amazon does (AFAIK). That means whenever you do a promotion somewhere else, you have to adjust your prices on the Amazon App Store as well. The kicker is, in other Stores, the developer can set prices as he wishes, so something like "Birthday Sale: 50% off this weekend" can be done easily. But on Amazon, you actually do not set the prices, remember? You only can set the list price and although the articles are not entirely clear about it, in my understanding you cannot raise list prices again, so your promotion becomes more or less permanent. Again, this is not verified as I have not read to corresponding passage of the Amazon App Store agreement, but if true, that would make outside promotions pretty much impossible for developers and thus giving them less leverage with other stores while depriving them of promotional marketing tool as well and be a pretty big accelerator for the race to the bottom too.

That's something the IGDA made up by the way - it MIGHT happen in the future. And they freely admit that other retailers reserve the power to set the price themselves anyway.

Moreover, I believe that a more reasonable way to read this provision (if it were to come into existence) is: "If you offer the item half price on another shop, you can't prevent us from matching this price". Nothing to do with list price.

To be very clear: the IGDA has no real authority over game developers here (they also acknowledge that) and I have no horse in the race as I am not a developer nor a smartphone user (well, yet . But I think the IGDA did raise interesting points and I am curious to find out why Amazon as a market newcomer had such harsh terms in their agreement. Finally, I think it should be every developers duty to check those agreements carefully before submitting Apps if they do not want to be screwed later on by the terms and conditions. This is not limited to Amazon, but to all App Stores: They all have their little odds and ends which you have to watch carefully.

I basically believe that, benefits or drawbacks of the Amazon appstore aside, the IGDA's article is predicated on a false premise, and spreading "Doom and Gloom" scenarios about what might happen. Basically, they've instantly discredited themselves in my eyes through bad maths and hypothetical evil scenarios.

I'd also like to point out that, frankly, the whole point of the app store is that people can find your product, rather than not find your product and thus not pay you (as a developer).

If you're making more money selling your product somewhere else, you can withdraw your product from Amazon and your problems are solved.

If Amazon is using its clout to make sure developers can't charge high prices, I personally as a consumer must say that I am greatful to know the developer won't be ripping me off by charging $10 on Amazon (where he knows I'll find his app easily) and charging $1 on CrAppStore where he knows I won't go.

I'm not even sure that Amazon's terms are so different from what book publishers face either - books have a list price, and so it might make sense to treat books and software the same way.

The original IGDA post is here: http://gamepolitics.com/2011/04/15/igda-criticizes-amazon-android-app-store-terms For those of us who know how to read between the lines, it is a thing of beauty. It's a shame that computer game journalists seem to have checked in their critical thinking at the door.

 

[Boemmel]

Marketshare is counted in revenue, not unit sales. I realise that this pokes a hole in the following argument, but I'll bear with you.

No, it´s not and that is not an absolute. There may be some cases where this is true, but most of the time it is unit sales. Smartphone market share is measured in unit sales, console market share is measured in consoles sold, operating systems are measured in installed units (how else would you factor in Linux market share?) and so on. Also, how would you measure something like browser market share, as there are no direct revenues involved in that one?

Now if you want to say that App Store market share is counted in revenue instead of unit sales, that would be a much more compelling argument. In the App Store market, both revenue and unit sales are valid measurements for market share and are both used within in the industry for analysis.

Revenue is definitely interesting as it shows who makes money in the App Store business, but unit sold (or downloaded in this cases) is also interesting, as it captures free Apps without direct revenue and shows customer interest in the specific App ecosystem. Example: If you compare iOS and Android App revenue, the latest data suggests that Android App revenue is still magnitudes lower that iOS App revenue (the oddest one I have seen even showed RIM of all people generating slightly more App revenue than Android...). However, there are lots of people downloading and using Apps for Android and the Apps downloaded show a much closer gap between iOS and Android and Android smartphone market share (see that one before? in the US is actually now suggested to be higher than iOS smartphone marketshare (and is measured in units sold btw, just to make that clear)

So in the App Store business, both revenue and units sold (downloaded) are valid market share measurements, but a sweeping argument of "market share is measured in revenue, not unit sales" is simply not true.

First off, Amazon just threw away 30,000 USD. Since they lose money in this pricing scenario, there would have to be a reason to do it. Very few exist beyond promotion (e.g. 1 day promotion).

Usually, you would be right, but in the case of the Amazon App Store, there is a valid reason right now to do this kind of pricing: Amazon is the new entrant into a market with established competition, like the Apple App Store and Android Market. They need to establish themselves and have some high barriers of entry right now, like not being preinstalled on any smartphone right now. So in order to get a foothold into the App Store market, it might make sense for Amazon to be a price discounter at least for now in order to attract customers. This tactic seems to be clearly what Amazon intends to do, as their "a free App a day" promotion shows. So long-term, i would tend to agree with you, but right now, Amazon has good reasons to discount prices right now.

Maybe they do, maybe they don't. Chances are they don't - if you look at how over time they've actually opened up their business to allow other sellers to compete with them on price for items (for example books).

That is why the future is so annoying: It is hard to predict

I think Amazon will not be able to bully developers into bad terms as I believe they will retain numerous competition well into the future. I think iOS will continue to play a big role, maybe with lower market share but continuing to have a dominant revenue share (see what I did here? and I think one or two other systems will also remain in the market with a significant enough share to matter (although I am not sure which one will survive).

Since everyone else but Android is a vertical platform vendor with control over the whole stack, Amazon might be permanently restricted to the Android ecosystem, so even if they capture all of that (questionable, since Android Market is still there and will continue to be there), Amazon could very well be checkered in from the competition (as are the competitors themselves). However, that will not come from the good intentions from Amazon themselves, either competition or regulations (like the ones in Germany for books) will keep Amazon honest, nothing else.

That's something the IGDA made up by the way - it MIGHT happen in the future. And they freely admit that other retailers reserve the power to set the price themselves anyway.

Now it gets interesting! That was the part that gave me the biggest headaches, as it looked so onerous I could not understand (and still don´t) why Amazon as a newcomer in the market would actually put something like that into their terms. Do you have access to the developer agreement? Could you read the corresponding passage and can say with certainty that the IGDA was simply making things up? Can you tell without breaking an NDA or something? Because that would be very interesting for me to know

Moreover, I believe that a more reasonable way to read this provision (if it were to come into existence) is: "If you offer the item half price on another shop, you can't prevent us from matching this price". Nothing to do with list price.

That would be the more reasonable way to read the provision, yes. But again, do you have access to the agreement? Because I would think this is coded in some weird legalese and the sad truth is that if it is there in the agreement, it will be put into existence sooner or later. Not even necessarily because Amazon really cares about it, but because Amazons lawyers are keen on enforcing it, as that is sadly the way those agreements work today

I basically believe that, benefits or drawbacks of the Amazon appstore aside, the IGDA's article is predicated on a false premise, and spreading "Doom and Gloom" scenarios about what might happen. Basically, they've instantly discredited themselves in my eyes through bad maths and hypothetical evil scenarios.

I would like to believe that as well. However, I might have become a bit cynical in regards to legal agreements and although the IGDA may very well be spreading the worst case-scenario right there, I am sadly convinced that developers have to account for that in those agreements. That might be pessimistic thinking and most developers might even disagree, but I do not think that discredits the argument. Besides, I think the IGDA put this out especially for the numerous small developers in the App Store ecosystems.

The big guns like EA, Activision etc. do not need that advice, as they have internal legal teams of lawyers who can put up a fight with Amazon should push come to shove. I actually even think those legal teams butt heads with incumbent App Store lawyers from Google and Apple on a regular basis anyway, if only to keep in shape But a small developer simply does not have the resources to fight a prolonged legal fight with Amazon over App Store terms and I think the IGDA wants to advise those people, even if they take a very pessimistic view on things.

I'd also like to point out that, frankly, the whole point of the app store is that people can find your product, rather than not find your product and thus not pay you (as a developer).

Agreed and in the case of Android, also to give you an easy way to pay. The Android Market is still way behind the Apple system in payment comfort (especially if you go outside the US), so that is pretty surely one of the factors in Android having much lower App revenue in comparison. Amazon on the other hand, has the payment system figured out nicely, which is why I believe they actually have a good chance of capturing a nice chunk of the market.

If you're making more money selling your product somewhere else, you can withdraw your product from Amazon and your problems are solved.

I think that is what the IGDA is implying right now

If Amazon is using its clout to make sure developers can't charge high prices, I personally as a consumer must say that I am greatful to know the developer won't be ripping me off by charging $10 on Amazon (where he knows I'll find his app easily) and charging $1 on CrAppStore where he knows I won't go.

That is sort of the same thinking I had about the Apple In-App purchase controversy as well. From a consumer standpoint, those terms are actually pretty nice, so I am not directly complaining. However, things like this, however tedious they might look, are important for the future of game development and if such developments steers future game developers away from my preferred "I give you my money, you give me a great game"-model to other means of monetizing which I do not like (ad-based, "freemium" and the likes) and could affect my future game-playing self, I tend to watch the behind-the-scenes with great interest. What can I say, I want to keep on gaming even in my retirement home

I'm not even sure that Amazon's terms are so different from what book publishers face either - books have a list price, and so it might make sense to treat books and software the same way.

Maybe. But it seems that they are very different from the rest of the competition in the App Store space and the IGDA implies that the terms are also more restrictive than any other digital distributor for video games, which is the market we are talking about right now. Whether it makes sense or not to treat books and software the same way (I would argue against it in regards to physical books and am undecided on eBooks) seems not to be the question here. Right now, Amazon does some things very differently from say, Apple and Google and I think the IGDA wants to alert developers not to think they are similar in terms just because they are all App Stores.

The original IGDA post is here: http://gamepolitics.com/2011/04/15/igda-criticizes-amazon-android-app-store-terms For those of us who know how to read between the lines, it is a thing of beauty. It's a shame that computer game journalists seem to have checked in their critical thinking at the door.

Actually, the original post is, of course, on the IGDA website, more specifically here: http://igdaboard.wordpress.com/2011/04/14/important-advisory-about-amazon?s-appstore-distribution-terms-2/ [http://igdaboard.wordpress.com/2011/04/14/important-advisory-about-amazon?s-appstore-distribution-terms-2/] The IGDA blog is also referenced here in the Escapist article, for completeness sake. And the last comment about game journalism is in my mind, unnecessary, inflammatory and unfortunate: The rest of your argument is so much better than that.

 

[domicius]

(I've cut down the text a bit to keep the conversation succinct(er), but I did read it all and answers are intended to respond to your sections)

No, it´s not and that is not an absolute. There may be some cases where this is true, but most of the time it is unit sales.

You're right, but I'll refer you to an investor's definition: http://www.investopedia.com/terms/m/marketshare.asp

You can find alternative definition, and using sales volume makes sense in commodity markets where unit pricing is relatively inflexible or invariant between producers, or, as in the smartphone market, where you're trying to establish who's going to have a dominant platform. Although...

Smartphone market share is measured in unit sales, console market share is measured in consoles sold, operating systems are measured in installed units (how else would you factor in Linux market share?) and so on. Also, how would you measure something like browser market share, as there are no direct revenues involved in that one?

For O/S's what some call "market share" is known as the "install base" http://en.wikipedia.org/wiki/Installed_base:
"Installed base or installed user base is a measure of the number of units of a particular type of system (usually a computing platform) actually in use, as opposed to market share, which only reflects sales over a particular period. Because installed base includes machines that may have been in use for many years, it is usually a higher figure than market share. Many people see it as a more reliable indicator of a platform's popularity."

Also, browsers do make money - see: http://www.mozilla.org/foundation/annualreport/2009/sustainability.html

....anyway, I do accept your point that market share can mean a lot of things to different people.

Now if you want to say that App Store market share is counted in revenue instead of unit sales, that would be a much more compelling argument. In the App Store market, both revenue and unit sales are valid measurements for market share and are both used within in the industry for analysis.

Revenue is definitely interesting as it shows who makes money in the App Store business, but unit sold (or downloaded in this cases) (snip)

I'd love to see the source of this (honest).

So in the App Store business, both revenue and units sold (downloaded) are valid market share measurements, but a sweeping argument of "market share is measured in revenue, not unit sales" is simply not true.

Touche

First off, Amazon just threw away 30,000 USD. Since they lose money in this pricing scenario, there would have to be a reason to do it. Very few exist beyond promotion (e.g. 1 day promotion).

Usually, you would be right, but in the case of the Amazon App Store, there is a valid reason right now to do this kind of pricing: Amazon is the new entrant into a market with established competition, like the Apple App Store and Android Market (snip)... make sense for Amazon to be a price discounter at least for now in order to attract customers.

That's what I said

That is why the future is so annoying: It is hard to predict

I think Amazon will not be able to bully developers into bad terms as I believe they will retain numerous competition well into the future. I think iOS will continue to play a big role, maybe with lower market share but continuing to have a dominant revenue share (see what I did here? and I think one or two other systems will also remain in the market with a significant enough share to matter (although I am not sure which one will survive).

I believe you are conflating the market for Apple Apps and Android Apps - since an iOS person cannot realistically buy a Android App and vice versa, they are practically two separate, albiet related, markets. You can compare the market sizes (in terms of revenue) to see who's doing better but not in terms of units, since that only really helps if you already know the install base size; statistics like "apps per user" are probably more useful.

Since everyone else but Android is a vertical platform vendor with control over the whole stack, Amazon might be permanently restricted to the Android ecosystem, so even if they capture all of that (questionable, since Android Market is still there and will continue to be there), Amazon could very well be checkered in from the competition (as are the competitors themselves). However, that will not come from the good intentions from Amazon themselves, either competition or regulations (like the ones in Germany for books) will keep Amazon honest, nothing else.

I'm not sure when Amazon has been regulated - are you sure you don't mean Google and its book scanning? Post up the news item please.

Now it gets interesting! That was the part that gave me the biggest headaches, as it looked so onerous I could not understand (and still don´t) why Amazon as a newcomer in the market would actually put something like that into their terms. Do you have access to the developer agreement? Could you read the corresponding passage and can say with certainty that the IGDA was simply making things up? Can you tell without breaking an NDA or something? Because that would be very interesting for me to know

It's on the web:
https://developer.amazon.com/help/faq.html
"Where can I get a copy of the Amazon Appstore Distribution Agreement?
Log in to the Amazon Appstore Developer Portal, click on Help, and then click on Developer Documents. You will be able to review the current version of the Distribution Agreement. "

I've made further comment at the end of this post

I would like to believe that as well. However, I might have become a bit cynical in regards to legal agreements and although the IGDA may very well be spreading the worst case-scenario right there, I am sadly convinced that developers have to account for that in those agreements. That might be pessimistic thinking and most developers might even disagree, but I do not think that discredits the argument. Besides, I think the IGDA put this out especially for the numerous small developers in the App Store ecosystems.

The big guns like EA, Activision etc. do not need that advice, as they have internal legal teams of lawyers who can put up a fight with Amazon should push come to shove. I actually even think those legal teams butt heads with incumbent App Store lawyers from Google and Apple on a regular basis anyway, if only to keep in shape But a small developer simply does not have the resources to fight a prolonged legal fight with Amazon over App Store terms and I think the IGDA wants to advise those people, even if they take a very pessimistic view on things.

I'm not sure where this pessimism comes from - Amazon has, for example, created a market for authors who could never get published (see the cheap $1 ebooks some people are posting up). Why doubt that they are out there to help small developers too? And I doubt there's any legal fighting - once a commercial agreement is signed, the two parties generally abide by it until there is a reason for acrimony. If they don't like it, they don't sign it.

That is sort of the same thinking I had about the Apple In-App purchase controversy as well. From a consumer standpoint, those terms are actually pretty nice, so I am not directly complaining. However, things like this, however tedious they might look, are important for the future of game development and if such developments steers future game developers away from my preferred "I give you my money, you give me a great game"-model to other means of monetizing which I do not like (ad-based, "freemium" and the likes) and could affect my future game-playing self, I tend to watch the behind-the-scenes with great interest. What can I say, I want to keep on gaming even in my retirement home

And you will keep playing! Same here! If you think this agreement is onerous, check out Nintendo's agreements to game developers in the 80s. And the market (in revenue) is bigger than it ever was - no reason to worry about "the future of game development". It's not a rare orchid in a hothouse on the precipice of disaster - although developers would sure like to think they're special.

Maybe. But it seems that they are very different from the rest of the competition in the App Store space and the IGDA implies that the terms are also more restrictive than any other digital distributor for video games, which is the market we are talking about right now.

Yes - they're a normal retailer, putting Apps into a normal retail model; It's different from what's out there for games... but it's what most of us have been using for the last decade or so (in terms of online retail

Whether it makes sense or not to treat books and software the same way (I would argue against it in regards to physical books and am undecided on eBooks) seems not to be the question here.

In the 80s, they were both sold in specialist stores that displayed them on the shelves in exactly the same way. And now that everything is being sold online... they're also being sold the same way.

Actually, the original post is, of course, on the IGDA website, more specifically here: http://igdaboard.wordpress.com/2011/04/14/important-advisory-about-amazon?s-appstore-distribution-terms-2/ [http://igdaboard.wordpress.com/2011/04/14/important-advisory-about-amazon?s-appstore-distribution-terms-2/] The IGDA blog is also referenced here in the Escapist article, for completeness sake.

My bad - I copied the wrong link

And the last comment about game journalism is in my mind, unnecessary, inflammatory and unfortunate: The rest of your argument is so much better than that.

The Escapist has high quality articles, but it falls far short of journalism - I go to Gamasutra for that. Reposting a news item is the very definition of lax journalism, and I don't like seeing that.

Let's wrap it all up, anyway, with news that the original terms that IGDA made a fuss about had been replaced last November, and there was some confusion about it all. It kinda makes sense that IGDA didn't bother to check they had the final terms and conditions Amazon signs with developers - they were indulging in wild speculation anyway. My opinion of them is revalidated.

News item is here:
http://androinica.com/2011/04/amazon-responds-to-game-developer-controversy-nothing-to-see-here/

I breathlessly await The Escapist to publish this story too.

Gasp.
Choke.
Thump.

 

[Boemmel]

Well, I want to preface this by saying thanks so far for a very interesting and insightful discussion, which I really enjoy, as it makes me think hard an thorough about the topic and gives me a chance to learn new things and polish my own arguments Although I am not sure how much deeper we can go before really going down the rabbit hole (and this being pretty obscure now anyway, I would guess), I thought I should mention it

Now onto my responses:

You're right, but I'll refer you to an investor's definition: http://www.investopedia.com/terms/m/marketshare.asp

You can find alternative definition, and using sales volume makes sense in commodity markets where unit pricing is relatively inflexible or invariant between producers, or, as in the smartphone market, where you're trying to establish who's going to have a dominant platform.

Good find and I think that is a good definition which makes a lot of sense. I guess that shows my personal bias: As my primary interest is in IT and IT markets, those have become highly commoditized in recent years and thus tend to use the sales volume definitions for market share is very common in that field now, so that skewed my perception. Which is kinda odd, because I usually tend to rail against analyst opinion concentrating on that metric alone as it does not really show you where the money goes, which I think is the interesting part. I guess it rubbed off of me in a bad way

However, your point also got me thinking about this and maybe it makes sense to look at the current smartphone market as price invariant between producers, because actual device price takes a backseat to the cost of the contract you usually have to acquire while buying a smartphone. At least as far as I have observed, contract subsidies make price differences between smartphones neglibile, relatively speaking as they dwar

For O/S's what some call "market share" is known as the "install base" http://en.wikipedia.org/wiki/Installed_base:
"Installed base or installed user base is a measure of the number of units of a particular type of system (usually a computing platform) actually in use, as opposed to market share, which only reflects sales over a particular period. Because installed base includes machines that may have been in use for many years, it is usually a higher figure than market share. Many people see it as a more reliable indicator of a platform's popularity."

Thanks for remembering me about that one, installed base should be the term we use in this context here. Maybe it´s just my imagination, but to me, it seems that installed base is not nearly used as much in smartphone analysis as it should be, which I find odd. It seems current device sales and sales projections are much more preeminent in conversations in comparison to installed base and I wonder why.

Maybe it has to do with the newness of the modern smartphone space, since it only started to really take off after the iPhone and the subsequent Android introduction? That would put the modern smartphone space at barely four years old right now, I guess observations about the installed base take a bit more time to settle before they get analyzed more in detail? I honestly do not know, but maybe that could be a factor? Also, phones get replaced regularly after around two years, when the current contract of most people runs out, maybe that volatility makes people think installed base is harder to take into account or makes lock-in effects make much less relevant?

Also, browsers do make money - see: http://www.mozilla.org/foundation/annualreport/2009/sustainability.html

Thankfully they do, as I think it helps keep variety in the market and spur competition. Browser development right now is really fast-paced and we have lots of interesting competitors, which I really like (as the half dozen or so browsers on my computer can attest to

However, I just wanted to emphasize that browsers do generally not generate direct revenue anymore, via a sale to the consumer. The times of Netscape Navigator costing money (I think it was 30 bucks or so at the time) are more or less gone, browsers generate revenue via other means like search deals or licensing deals for bundling with hardware (like Opera does). I am not sure about the mobile space, there may be a comeback of sorts for paying for browsers (a tiny little bit), but by large, a browser does not cost consumers money directly, but makes its money elsewhere.

....anyway, I do accept your point that market share can mean a lot of things to different people.

Well, economists have butted heads over this for a long time and I think they still do. It is a broad topic, after all and with all sorts of important consequences and I think both of us have good, tested arguments on our side. Nothing against that, I think having those different things are useful as they get applied to very different scenarios and have different explanatory values depending on the scenario and I find, friendly, respectful arguments about such things quite enlightening

Now if you want to say that App Store market share is counted in revenue instead of unit sales, that would be a much more compelling argument. In the App Store market, both revenue and unit sales are valid measurements for market share and are both used within in the industry for analysis.

Revenue is definitely interesting as it shows who makes money in the App Store business, but unit sold (or downloaded in this cases) (snip)

I'd love to see the source of this (honest).

Well, I will try to dig up some more, but I have to find them again first, so just a little heads-up:

First, we have a classic, revenue-based view on the smartphone market:

IHS: Apple Maintains Dominance of Mobile Application Store Market in 2010 [http://www.isuppli.com/Media-Research/News/Pages/Apple-Maintains-Dominance-of-Mobile-Application-Store-Market-in-2010.aspx]

Yeah, the title it the ?App Store Market?, but that would be revenue-based market look on the smartphone market.

But more prevalent in what I have seen are the unit-based views like the one Gartner published:

Gartner Says Android to Command Nearly Half of Worldwide Smartphone Operating System Market by Year-End 2012 [http://www.gartner.com/it/page.jsp?id=1622614]

To be clear, I think the Gartner one is not very good, as the predictions are really strange and the methodology thin at best. However, it shows that they measure in units sold and from what I have seen, this view seems to be the more popular one. There was a somewhat similar analysis from IDC a few days ago, but for the life of me, I cannot find it right now...

Connecting to this, in the debate whether revenue or unit sales would be more appropiate, I also stumbled upon some old notes of mine and the expanion of market share observations to the much broader and much more interesting market power analysis. I think this goes a little too far, but if you like, I can dig up some stuff going in that direction, too

Finally, I am not sure if you have seen that before, but I have seen some very good analysis about the mobile space lately from Horace Dediu on http://www.asymco.com I think he raises good points, shows lots of interesting data with interesting analysis and has some nice-looking charts as well

First off, Amazon just threw away 30,000 USD. Since they lose money in this pricing scenario, there would have to be a reason to do it. Very few exist beyond promotion (e.g. 1 day promotion).

Usually, you would be right, but in the case of the Amazon App Store, there is a valid reason right now to do this kind of pricing: Amazon is the new entrant into a market with established competition, like the Apple App Store and Android Market (snip)... make sense for Amazon to be a price discounter at least for now in order to attract customers.

That's what I said

Then I misunderstood and apologize Good to see that we agree

I believe you are conflating the market for Apple Apps and Android Apps - since an iOS person cannot realistically buy a Android App and vice versa, they are practically two separate, albiet related, markets. You can compare the market sizes (in terms of revenue) to see who's doing better but not in terms of units, since that only really helps if you already know the install base size; statistics like "apps per user" are probably more useful.

You might be right. I feel uneasy looking at them separately: Those Apps have a serious network effects and I would feel much better if there was good way to link them together somehow, but to be honest, a good solution eludes me at the moment. I have actually seen some "apps per user" statistics, but if I remember correctly those were for iPad only and have been a few months old. I do not remember seeing one for Android, which makes a comparison difficult. If I find the time, I will try to see if I can find one of those, should be interesting to see. By the way, that "apps per user" stat is used in the game console market commonly, they even have a nifty term for it: "attach rate". I thought you might like to know, I think it might come in handy someday

Since everyone else but Android is a vertical platform vendor with control over the whole stack, Amazon might be permanently restricted to the Android ecosystem, so even if they capture all of that (questionable, since Android Market is still there and will continue to be there), Amazon could very well be checkered in from the competition (as are the competitors themselves). However, that will not come from the good intentions from Amazon themselves, either competition or regulations (like the ones in Germany for books) will keep Amazon honest, nothing else.

I'm not sure when Amazon has been regulated - are you sure you don't mean Google and its book scanning? Post up the news item please.

Well, it is actually not a specific regulation against Amazon, but a regulation in regards to the entire book market, which exists in Germany and is described in Wikipedia as Fixed Book Price Agreement. I do not know how exactly other countries handle it, but Germany actually has it codified in law, the so-called ?Buchpreisbindung? is very real and one of the oddest (and oldest) laws you may see.

Basically it demands a fixed price for both hardcover and paperback editions of books in Germany, regardless of merchant. This means Amazon cannot compete on price in regards to German books in Germany, they have to sell at the same price as the little mom-and-pop bookstore in your hometown. Curiously, that only applies to German books, so the English book section of Amazon does not suffer from the same restriction. It is a fascinating little nugget and subject to much controversy here in Germany: If you are interested, I will try to see if I can dig up more information about it

It's on the web:
https://developer.amazon.com/help/faq.html
"Where can I get a copy of the Amazon Appstore Distribution Agreement?
Log in to the Amazon Appstore Developer Portal, click on Help, and then click on Developer Documents. You will be able to review the current version of the Distribution Agreement. "

Yeah, but I have to sign up as an App Developer with Amazon then, right? Isn´t that kind of a big hoop to jump through if I just want to satisfy my curiosity a bit? Besides, I would be a really lousy App Developer anyway and that would be after I dust off my rusty coding ?skills? (or lack thereof)

I'm not sure where this pessimism comes from - Amazon has, for example, created a market for authors who could never get published (see the cheap $1 ebooks some people are posting up). Why doubt that they are out there to help small developers too? And I doubt there's any legal fighting - once a commercial agreement is signed, the two parties generally abide by it until there is a reason for acrimony. If they don't like it, they don't sign it.

Maybe I just get grumpy as I get older (which would be a terrifying thought in itself . It is just my impression that the smartphone and the App space is in full-on Wild West mode right now. Every vendor is more or less exploring terra incognita and the terms and regulations in this space are constantly boundary-pushing. I think that the App Store people at Amazon actually want to help developers, but I now firmly believe that corporations should not be viewed as monolithic, with singular intentions and motivations, but rather as an organism with very different agendas depending on what you analyze. Thus, although I may have trust in Amazon developer relations, I do not trust the Amazon lawyers that they will not pounce at every opportunity to gain the upper hand by any means possible, including screwing developers if they can. Maybe that just means that I have a low opinion of lawyers, I don´t know :-/

Besides, all of them do (and did) head-scratching or just plain stupid things in regards to legal matters in the past, be it Amazon, Apple, Google, you name it. I shudder at the memory of Amazon remote-deleting Orwells ?1984? from Kindles (which was as ironic as sobering) and they are hardly alone. We will se how it unfolds, but I am unconvinced that the lawyers will not try to ruin it for everyone else

And you will keep playing! Same here! If you think this agreement is onerous, check out Nintendo?s agreements to game developers in the 80s. And the market (in revenue) is bigger than it ever was - no reason to worry about ?the future of game development?. It?s not a rare orchid in a hothouse on the precipice of disaster - although developers would sure like to think they?re special.

Oooh, the infamous ?Seal of Quality? criteria, I remember reading about those And I am happy that the game market is big and healthy for now and do not really worry about the future of game development, all those ?games are dying? cries in various incarnations are kinda silly to me. I admit, however, that I see some troubling signs about trends in the industry I really do not like and I think it is pretty clear that gaming is changing and I am not sure the direction of change is something I would still enjoy as much. I also wonder about a lot of the really big development houses and whether their current habit of ever-increasing big-budget releases is really sustainable or whether they are in for a rude awakening in the future. Also, a lot of the current big-budget games only elicit a kinda ?meh? feeling from me, although I think that may be more the fault of me getting old and grumpy, as I already said

Still, this is a somewhat diffuse feeling and more being slightly uneasy about the future direction of gaming, which might just be a symptom of uncertainty. Also, the last years have rekindled my enjoyment of games again thanks to some strong efforts from the indie scene, which has put out a lot of quality games I enjoy in recent times. So we will see what the future of gaming will bring, I guess I should put the grumpy me more at ease, the rest of myself would have more time to play great games that way, too

But developers can actually be very special: Especially whiny, especially dense, especially unimaginative, you get the drift Do not deny them that

Yes - they?re a normal retailer, putting Apps into a normal retail model; It?s different from what?s out there for games... but it?s what most of us have been using for the last decade or so (in terms of online retail

Hm, I think I will have to dive deeper into that and brush up my knowledge about retail models. Right now, I would think that there are still significant differences, but I will also freely admit that my knowledge about retail modes needs freshing up, so I will trust you on that for now and will try to read up on them

In the 80s, they were both sold in specialist stores that displayed them on the shelves in exactly the same way. And now that everything is being sold online... they?re also being sold the same way.

But don´t you think brick-and-mortar stores and online stores with digital goods do have some differences between them on logistics alone? Also, in the traditional value chain models of retail stores, you had much more layers between the producer (or in this case the developer) and the retailer (the online store). With the online store, you have some serious disintermediation, cutting out lots of middle layers, I would argue that this is not your old store model anymore, or what do you think?

The Escapist has high quality articles, but it falls far short of journalism - I go to Gamasutra for that. Reposting a news item is the very definition of lax journalism, and I don?t like seeing that.

Yeah, I use the time-honored ?complaining directly to the corresponding author? and, much more frequently the ?ignore and go to more worthy news stories in my RSS feed? methods. Surprisingly, the first one seems to work in my observation if the complaint is respectful, but maybe I am just idealistic that way

Let?s wrap it all up, anyway, with news that the original terms that IGDA made a fuss about had been replaced last November, and there was some confusion about it all. It kinda makes sense that IGDA didn?t bother to check they had the final terms and conditions Amazon signs with developers - they were indulging in wild speculation anyway. My opinion of them is revalidated.

News item is here:
http://androinica.com/2011/04/amazon-responds-to-game-developer-controversy-nothing-to-see-here/

I breathlessly await The Escapist to publish this story too.

Gasp.
Choke.
Thump.

I guess we will need a big oxygen tank for this one What I found curious about the Amazon response were two things: First, I thought that maybe they would use the opportunity to clarify all the confusion by reassuring developers on all aspects of the IGDA post, but the piece on the Amazon developer blog is a very short blurb. It could have been a bit more thorough for my tastes, it would have been a great opportunity for Amazon to generate some goodwill about this and drum up some interest for its new App Store. Which leads me to my second item: If the replacement took place in November, why did Amazon sit on the store for so long? The store opened up just a few short weeks ago, what happened in the meantime?