> Amazon Appstore will reduce developer revenue cut from 30% to 20% and give 10% in Free AWS Credit
I feel like this title is amazingly hard to read for many reasons all working against us at the same time!
‘developer revenue cut’ really means it’s Amazon’s part that’s reducing, not the developer’s.
And they’re reducing the ‘cut’ as in the proportion, not reducing some other previous cut they made to revenue.
‘Amazon reduces App Store fee from 30% to 20% and also gives 10% in AWS credit’ is I think what they mean, and is the opposite of almost every way I could find to read their title.
Sorry, for some reason I’m still having a hard time understanding. If a developer with less than $1 million in revenue sells an app on Amazon’s app store for $100 Amazon would get $30 and the developer would get $70 from each sale but now Amazon will get $20 and the developer will get $80 plus $10 in AWS credit from each sale. Am I understanding that correctly?
The first paragraph of the article is much clearer, and seems to agree with your interpretation:
“The Amazon Appstore has announced that it will be reducing its cut of developer revenue from 30% to 20% for developers that earn less than $1 million in revenue per year. The new terms, which Amazon is calling the Amazon Appstore Small Business Accelerator Program, will also provide developers with AWS promotional credit in an amount equivalent to 10 percent of the developer’s revenue if they earn less than $1 million in revenue per year. If a developer chooses to use those AWS credits, that brings their total Amazon Appstore revenue share up from 70% to an equivalent of 90%.”
You sell for $100. Amazon was taking $30. Now Amazon takes $20 and gives you a "promotional credit" of 10% of the $80, or $8.
So if you use all of the "promotional credit" then you make $88 which is not quite the equivalent of 90% but pretty close.
Assuming "promotional credit" means just regular credit you can use for anything on AWS, I wonder how much of this credit either gets left on the table (don't need AWS, credit expires) or stimulates further spending for Amazon (let's use AWS, it's "free").
It might be interesting to have that extra 8% not booked as revenue, but IANAn Accountant.
Sounds like at least Amazon doesn't view this as taxable income.
> 3. You may not sell, license, rent, or otherwise transfer Promotional Credit. Promotional Credit may be applied only to your own AWS account. Promotional Credit has no intrinsic value, is not redeemable for cash, has no cash value, is nonrefundable, and serves merely as a means to provide an incentive to use our Services. Promotional Credit may not be purchased for cash, and we and our affiliates do not sell Promotional Credit.
I don't think it matters either way... If it was cash spent on AWS, it would be a business expense and the total amount given to the taxman would be the same by all parties right?
Misreporting income is not a great idea even if it doesn’t change your tax liability. That said, I think of the “credit” as an elaborate discount or coupon system. Any CPA worth their salt could find a justification for why it’s not income.
I think a tax lawyer would have to answer this, and that it probably depends on the country.
In my country, I (even if "I" means a company) can receive a business gift with a maximum value of 42eur, twice per tax year from one company - everything above that is taxed.
Let's say i did some work for a local store and charged them 2000eur for my work. To do my work, I had 1000eur of expenses. I pay tax on 1000eur difference. With eg. 20% income tax, I'd have 800eur of profit. (yes, a bit simplified, I know)
Then they decide to give me a 200eur coupon for their store and give it to me (to my company), and this is counted towards my income (2200eur now). If i actually need stuff from their store, I use it, so now I earned 2200eur gross, spent a 200eur coupon in their store and 800eur anywhere, I have 1200eur of profits, and even after tax I earn more than I did before - with 20% income tax, I'd have 960eur of profit in cash form.
On the other hand, if I don't need their services, and can't sell the coupon to someone else, the situation is different. I still got 2200eur of income (2k+200eur coupon), spent 1000eur in other stores, get taxed on the 1200eur, technically still have 960eur of profit, but 200 of those are in a form of a worthless coupon, and only 760 in cash - so their usless coupon is actually costing me 40eur.
AWS gives out thousands of service credits to new US-based startups for free, so I'd find it hard to believe that those companies would be getting taxed for such a thing. I don't think those credits are taxable, in the US at least, because they are non-transferable, i.e. you can't redeem them for fiat currency.
The way I’d understand it is you should claim the income but only the portion that offset your expenses thus a net zero and no tax liability.
For example, Amazon give you $100,000. When you use only $1,000 you claim $1,000 income and $1,000 of expense. The other $99,000 is like a loan balance that hasn’t transferred to you or been “realized” and is therefore not taxable and shouldn’t even be reported afaik
Yeah, but this looks like turning actual money that they have in their hands into a "credit", and it's conditional on money changing hands and some of that actual money going to both parties involved, not a promotional credit generated out of thin air and offered to anyone who signs up. This looks an awful lot like payment-in-kind.
it's not a payment. you and the other poster are confused because in both cases yes your gross profit is higher and you do indeed need to pay taxes on that.
but in no way did AWS provide you with a source of income. they mearly decreased your expenses.
I think maybe I was (am?) reading too much into it because when I initially read that paragraph it just left me more confused! I guess I don’t really understand how the accounting of it works because they called it a “revenue share” which made me think one sale would result in:
$80 in developer revenue
$20 in Amazon revenue
But it also said the AWS credits will be based off of the developer’s revenue and judging by the “equivalent of 90%” it would seem that Amazon sees the transaction as more like:
$100 in developer revenue
($20) in developer expenses to list on the app store resulting in
FWIW, I had understood it first try, but I do agree that it is a bit strange as the normal way of phrasing this would be "Amazon reducing their cut of developer revenue from...".
How did you disambiguate ‘developer revenue cut’ to be Amazon’s cut not the developer’s? Since it says ‘developer’ not ‘Amazon’.
And weirder than that it’s not Amazon’s cut of the developer’s ‘revenue’ either - since the developer was never getting it in the first place - it’s their cut of the sale price, or the combined revenue, not the developer’s revenue.
1) We normally don't talk about the developer / manufacturer getting a cut: we talk about the middleman / sales channel "taking their cut", so inherently the word "cut" is biased to make it at least sort of understandable.
2) And no: developer "revenue" is the full cost of the receipt, and then a cost of their doing business is the cut taken by the platform, which decreases their resulting "income". The word "revenue" specifically is a number from which you deduct costs to obtain "income".
I think revenue is money you get your hands on, and then pay costs out of. If you never get your hands on it then it's not your revenue, it's someone else's revenue that they're paying their costs - your developer fee - out of. Like a singer's revenue is not all record sales as they're not selling the records they've just licensed someone else to do so and they're getting a cut (wait... so that's cut the other way around...)
So, the definition "money you get your hands on" definitely isn't correct, and the way to make this clearer is to think of it in terms of credit card processing and merchant accounts: if you sell a $5 product and the credit card processor takes $0.25, your revenue is $5, not $4.75, and they actually will report the full $5 to the government as part of a 1099-K and then your job is to report that full gross income and deduct the fees you paid. They also will report any sales you made which were refunded, and you would then separately report deductions for that also.
Now, that said, one can actually use that construction to argue that the store is then having revenue, and giving a royalty to the developer or something, and in fact my store did something where I sometimes modeled it as a retail storefront of licenses I purchased wholesale, but these are just not normal models for how the word "cut" is then applied: most people reasonably--and I think correctly--believe that the user bought something from the developer, with the store acting merely as a middleman payment processor charging a "fee" or taking a "commission" off of every sale (and I am pretty sure at least Google even models it directly in that way in its reports; there are a ton of advantages to the store to doing that, and I think even Apple sometimes reaches for this model).
From such standpoint, and to look at this using descriptive linguistics, you simply don't ever see anyone say "Apple
recently increased the cut of smaller developer's from 70% to 85%": every single headline I've seen says "Apple recently decreased their cut from smaller developers from 30% to 15%".
> How did you disambiguate ‘developer revenue cut’ to be Amazon’s cut not the developer’s? Since it says ‘developer’ not ‘Amazon’.
To me it's because in my mind "Amazon" is the person taking a "cut".
We never say "developers take 70% cut of the app store revenue", because developers don't "take a cut", they sell, and amazon takes a cut of their sale.
It made sense to me the first time I read it because I know most app stores appear to have settled around 30% as their cut, so I just assumed the 30% referred to the amount Amazon was taking. The rest just followed logically.
That seems a dangerous way of wording this. The market value of AWS credits is less than the equal amount in regular currency (so: 10% in AWS credits is less than 10% of the revenue). The developer share is increasing to 80% (with bonus AWS credits).
Also:
> You may not sell, license, rent, or otherwise transfer Promotional Credit. Promotional Credit may be applied only to your own AWS account. Promotional Credit has no intrinsic value, is not redeemable for cash, has no cash value, is nonrefundable, and serves merely as a means to provide an incentive to use our Services. Promotional Credit may not be purchased for cash, and we and our affiliates do not sell Promotional Credit.
While I definitely agree that saying it's upping the take home from 70% to 90% would be misleading - in a fair number of cases that 10% credit will be pretty easy to convert to direct value. It is certainly more valuable than, say, 10% of earnings being spendable on Amazon Basic items - they're not quite trying to pull a company store trick here and the fact that 80% of revenue is take-home sales already puts a decent chunk above Apple.
As a general labor rule, when a company gives me credit, I value that at $0. Even if this is technically wrong (it is definitely valued more) the reason for this is that the limitation imposed to how I use the value of my labor is a disingenuous negotiation tactic and I will not under any circumstances let my self by fooled by it. Therefore I treat the 10% credit as nothing more valuable then a smile or a letter of good will.
Submitted title was "Amazon will reduce dev. revenue cut from 30% to 20% and give 10% in AWS Credit". We've replaced it with a prefix of the article title. (The specific numbers don't need to be in the title, and we try to avoid abbrevs.)
This has real "company scrip" vibes that I am not crazy about. I'm sure it will be good in the short term for companies that are already using a lot of AWS services and have a lot of sales on the Amazon app store[1], but long term doubling down on Amazon's offerings seems risky.
I wonder if the solution, instead of breaking up amazon et. al., is to subsidize small companies' spend in the space in a way that effectively equalizes subsidies. These pricing strategies matter the most when you are small and dealing with a lot of cashflow problems and there's a real risk that you choose the provider you can afford and then get stuck.
[1] does anyone have a lot of sales on the amazon app store....?
It is weird how we allow monopolistic behavior if the company is part of an oligopoly rather than a pure monopoly. If we agree this is an abusive business practice, the specific market share of Amazon's app store shouldn't matter.
I'm wondering whether Google in their Play Store revenue cut reduction considered doing the same thing but decided against it due to the antitrust risk.
Similar to company scrip, this reminds me of "Charles Robin and Company" from the Gaspé region of Canada. The company was an exporter of fish that abused its monopoly position in the market. Fishermen were independent businesses but Robin's company was both buying the fishermens' catch (thus setting its price) and also the mortgage lender for the fishing boats (so they controlled their debt too).
Isn't any compute more-or-less transferable (presumably at less than AWS's dollar cost) if you take it and mine some currency with it? I assume there's something out there that effectively buy spares cycles if you install a client. Or resell S3 space. (And yes, this may be potentially dangerous to your AWS account reputation.)
This is actually something that I'm hoping that eventually homomorphic encryption would enable. Right now it's kind of a bad idea to buy leased out computation time from arbitrary sources. "Hey, I have all these AWS credits and I want to recoup the value of them, so I'll give you a 10% discount on compute time. Uh oh, it turns out I'm also a competitor for your protein folding endeavor, so I'll be analyzing your inputs to steal your secrets and then returning faulting outputs." I suppose you could just demand admin access to their AWS account and lock them out for the duration of your lease, but that's just as bad idea for them as the opposite is for you.
If we had efficient homomorphic encryption, then we could just sell so many operations. Then someone looking to lease second hand computation could just put a counter in the output to make sure they're actually running the full amount and bingo cryptographically certain results.
Eh I mean that’s what Amazon is hoping but it only happens if you start depending on the AWSBucks.
* Pay 30% to Apple or Google on their stores.
* Pay 20% to Amazon on their store and get 10% in AWS credits.
If you just treat it like the credits are worthless then it might still be a good deal. But probably not since Amazon is cutting fees and offering incentives because their store has so few customers. The Microsoft store had similar programs a while back and it didn’t really go anywhere.
People always focus on the Apple “tax” but forget that the App Store and the Play Store’s value are as sales channels and they can get away with charging that much because in aggregate publishers will make more money paying it than not being in the store. Amazon doesn’t have that value prop currently.
Given that Amazon already makes a lot of money on AWS and that they have lots of cash on hand, I am very skeptical that they need more financial incentives to be able to develop new services.
Like, this could happen, but it feels like the marginal utility of the "aws buks" are near zero for Amazon itself.
The way the headline is worded made me think it was giving developers less money, but it sounds like it's actually giving them more money as it's reducing Amazon's cut. So yeah, seems good for devs on that platform.
> This is just a play to nudge apple to reduce prices by trying a new anchor
Not really, this is just them copying Apple and Google. This fee reduction only applies to developers making less than $1 million per year in revenue, which IIRC is the same thing the others are doing. (although to be fair, there probably aren't a ton of devs making more than $1m per year on their store lol)
I think this is most likely a ploy to stave off regulation. In other words, they're doing the exact same thing Apple/Google are doing for the exact same reasons.
For developers who don't want to use AWS Credit for normal business operations, has anyone figured what sort of crypto mining on AWS has the highest ROI?
Seems like you could convert AWS credit to crypto to 'cash it out'. Do you get 10% of the face value of the credits or more or less?
Perhaps not, but hasn't Amazon here basically lined up the incentives to make it the most logical thing for someone to do? A person in this scenario is receiving AWS credit they don't want, AWS won't offer a market for, so they're exchanging? arbitraging? it into some cryptocurrency. (And from there, probably to cash.)
Someone should make an AWSWS webservice where you can get paid to run others' instances on your account to monetize credits - would probably be a lot more efficient.
Would be interesting to see where the market prices these credits.
This is too b&w. Does a meat eater not care about the environment or the animals?
Mining crypto does not mean you do not care about the environment. Heck, we all live in 1st world cities that are giant wastes of energy, we spend massive amounts of energy traveling.
No it's not black and white. Some technologies have a strong environmental impact but they are usually very beneficial to the society. I can't say that about the proof of work of cryptomoneys.
Great reminder that Android manages to have a third party app store or two run by giant companies (there's a Samsung one as well I believe) and it doesn't water down the Google Play Store or lead to important exclusive apps being restricted to those stores. A lessons for those who believe Apple opening up their apps would pose a threat to the App Store.
What's interesting to me about it as a consumer is that I actually find the highest quality apps in a third party app store (fdroid). It's not because of exclusive deals or anything, it's just because the Play Store promotes crap full of ads while fdroid intentionally does the opposite.
It increases developer revenue by ~15%, and adds an AWS credit for another ~15% on top of that.
I’ve never really felt the urge to develop a public-facing app on my own, but I’m going to have to give it some serious thought now. Developing an Android app through contract labor and distributing it via Amazon’s App Store could potentially end up bootstrapping another line of business by providing AWS infrastructure.
Now, if Amazon comes out with a viable competitor for Oculus and quickly expands into AR…
When BlackBerry was adding incentives to get developers to build for their new platform, their app store got flooded with minimum-qualifying-effort crap. I'd expect something similar here, if people think it'll pay off.
This is a cute offer, I like it. It's clear that app store costs have been going down for small developers, which is a really nice thing to see. This is only happening thanks to regulatory attention.
It would be nice if more preferable terms can still be had for medium sized companies, who are the biggest competitive to the mega caps. I'm talking about maybe <$100M of revenue per year, 20% would be nice.
Why is charging a flat fee never an option? Just take $200 and let me do my thing. Taking any % of my income on the regular as a kind of existence tax is detrimental for the ecosystem.
1. Some of their costs scale with the number of purchases or revenue made through the shop (traffic, support, payment processing fees)
2. Fixed costs, like development effort, need to be distributed across their customers. Fixed fees will be negligible for big customers and unaffordable for small customers.
3. They're gatekeepers for these devices. If you want your app on a device they can control you need to pay their fees. So as long as the fees are not big enough to deter a developer from publishing their app for that device, they can charge whatever they want.
I think revenue sharing is the best pricing model for an app store, but without abusing the gatekeeper status the fees would likely be significantly lower.
There are incremental costs involved in bandwidth, if nothing else, to actually distribute your application so it makes sense it's not a simple flat fee.
I've actually never looked at what the bandwidth and storage costs for my apps could be. But also, they could easily be taken out of the equation by letting me pay for that separately? Inclusion in the mandatory single point of failure that is the app stores _by itself_ should not demand a hefty, ongoing tax
They sell a ton of kindle fires. Their app store doesn't have the selection of iOS or Android, but it's got a significant # of apps that average consumers might consider deal-breakers. In particular, as a cheap iPad alternative for kids, they have plenty of games.
I wonder if this is the way Apple and Google will eventually retreat from their 30%* cut, by using their app store chokepoint to nudge developers to their platform. Seems like a worse monopolistic practice than the 30% cut to me.
For Google, that'd obviously be GCP discount. For Apple, less obvious. Pushing iCloud storage? Apple Music? They've already forced every app to support Apple Pay and Sign In with Apple, so they likely don't even need the carrot.
*yes I know its not 30% anymore for some/most usecases.
I love how different minds interpret things. I read the title and understood it immediately. I then second-guessed myself when i read the comments thinking I had got it wrong. Although i hadn't.
Maybe the writer and I have this in common; my sin is ambiguous titles also; i feel for you friend.
The title has already been amended once and now reads “ Amazon Appstore will reduce its developer revenue cut” which is an improvement on the original, but it should say “Amazon Appstore will reduce its cut of developer revenue” As it is, it’s still unclear whose cut is being reduced.
It's amazing to me that all the comments here are about Apple when the much larger Google Play store also has a Google cloud offering that competes with AWS. If Google implemented something similar to this they could score big customers who have an app on both Apple/Google stores.
If I had to guess why that doesn't exist, I'd guess that Google is scared of anything that smells like abusing monopoly power given all of the government interest in them over the last couple of years. Of course, big corporations are weird. I could just be overthinking it and it's just that the cloud folks and the play store folks don't talk to each other.
...what? This sounds like a blatant way to reduce the amount paid out, like their backloaded stock offers.
Edit: Actually read TFA, I was mistaken, this is about reducing the fee charged to app developers. On surface a good thing, didn't even know Amazon had an app store.
> Apple announced last year that it will reduce its App Store’s developer revenue cut from 30% to 15% for developers that earn less than $1 million in revenue per year. This change went into effect at the start of 2021. Earlier this year, Google announced that it too will reduce the Play Store’s cut form 30% to 15%, but only for the first $1 million in annual revenu earned by all developers. That change will go into effect on July 1st.
> This change by the Amazon Appstore brings its revenue share more closely in line with the new policies of Apple’s App Store and Google’s Play Store. ...
Haha, wake me when they start paying developers to publish on the Amazon Appstore. Remember, this is for the de-Google-ified Android devices Amazon sells. They don't have Google services so chances are your apps will need major refactoring, and then you are stuck supporting two ecosystems all the time that are subtly different and broken (Amazon tries to emulate some Google services) while the Google side keeps tightening the noose around your neck that are the Google services.
And all that, to sell on an app store for devices that are the cheapest crap imaginable and attract a crowd that is about the opposite of what you would want when charging money for apps.
I feel like this title is amazingly hard to read for many reasons all working against us at the same time!
‘developer revenue cut’ really means it’s Amazon’s part that’s reducing, not the developer’s.
And they’re reducing the ‘cut’ as in the proportion, not reducing some other previous cut they made to revenue.
‘Amazon reduces App Store fee from 30% to 20% and also gives 10% in AWS credit’ is I think what they mean, and is the opposite of almost every way I could find to read their title.