Warning issued over Amazon App Store 'small print'

Warning issued over Amazon App Store 'small print'

By Rob Crossley

April 14th 2011 at 1:48PM

IGDA says the retailer has too much control over app prices

Amazon has potentially dangerous control over developers who distribute games on its App Store, an industry group has warned.

The International Game Developers Association (IGDA) said in an open letter that Amazon’s ability to manipulate app prices, particularly without the permission of its creators, gives the digital distributor too much power.

“The IGDA’s bottom line is simple,” a statement read.

“Under Amazon’s current terms, Amazon has little incentive not to use a developer’s content as a weapon with which to capture marketshare from competing app stores.”

[READ THE IGDA'S LETTER IN FULL]

Central to the IGDA’s complaint is that Amazon can pay developers one of two royalty terms. The first is a traditional ‘70 per cent of revenues’ model, one that apes Apple’s own terms and conditions.

Yet the second is  ‘20 per cent of the list price’. In this scenario, should a game be offered for free in a promotional deal, developers will still be paid a fifth of what the game would otherwise be generating.

IGDA’s central concern is Amazon has the authority to switch pricing terms on its own volition, without needing the permission of a game’s developer.

“We are not aware of any other retailer having a formal policy of paying a supplier just 20% of their minimum list price without permission,” IGDA said.

The association went on to criticize the nature in which a list price is determined.

“Amazon dictates that developers cannot set their list price above the lowest price on any other app store,” it said.

“In other words, if you want to sell your content anywhere else, you cannot prevent Amazon from slashing the price of your game by setting a high list price. And if you ever conduct even a temporary price promotion in another market, you must permanently lower your list price in Amazon’s market.”

Amazon has not yet publicly responded to the concerns.

“While Amazon has been very willing to engage with the IGDA, it has thus far expressed zero willingness to adjust its distribution terms,” IGDA said.

In the full open letter, IGDA warns that Amazon has the power to discount any game when it chooses, or offer any for free, or sink the price of a game when it reaches a peak in popularity. It says this power could lead it to be a dominant app games platform with considerable sway over its development partners.

It also warns that other app distributors, such as Google and Apple, may be forced to follow suit if Amazon gains ground in the market.

The Amazon App Store launched in March.