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So I'm trying to work out why? And off the top of my head it's probably combination of: 1) Helps with micropayments for low value in-app purchases 2) Creates
by buro9 14y ago
So I'm trying to work out why?
And off the top of my head it's probably combination of:
1) Helps with micropayments for low value in-app purchases
2) Creates a disconnect between the real cost and perceived cost
The latter helps Amazon create an artificial incentive that they can use to build their store. For example: Buy something physical off amazon.com and earn 100 free Amazon coins to spend on something digital (implicit: with Amazon).
- Terretta 14y ago> So I'm trying to work out why? Have you checked out the Xbox Marketplace? See "Microsoft Points".
- dmix 14y agoAlso the ability to exchange coins, similar to gift cards.
- buro9 14y agoYup. And conversion of customer behaviour... they could offer Amazon coins as rewards for Marketplace sales knowing that they'll move some customers to future digital offers (I'm thinking the 2nd hand CD, books and DVD markets, but there are others I'm sure).
- nemothekid 14y agoI've seen a lot of transactions where amazon gift cards are accepted if paypal isn't usable as well.
- pavel_lishin 14y agoIt lets you put money into their ecosystem without being able to take it back out. It's a series of infinite gift cards, without the inconvenience of having to print physical gift cards.
- pi18n 14y agoAlso, the earlier they can get money the more it is worth.
- jonnathanson 14y agoThink back to trips to Disneyland or Disneyworld as a kid. Remember Disney Dollars? Not only were they fun and kid-friendly, creating a distance between real currency and purchases within the park...but they were also redeemable only at Disney parks. This is the concept behind all loyalty programs, in a nutshell. It's about giving ostensible rewards to loyal customers in an attempt to create what economists call "switching costs," i.e., the degree of hassle involved in moving from one service provider/vendor/business to another. If you've got enough points built up with one provider (e.g., American Airlines), you'll be reluctant to spend money on other providers (Delta, for instance). Side benefits include increasing customer basket size, increasing purchase frequency, converting customers across categories, and increasing share of wallet per customer. As loyalty programs go, Amazon Prime has been stellar. It's very costly for the company, and it had Wall Street in a frenzy when it first launched. But it works (and it's also very beneficial to consumers who use it). I can't say I see the value in this program as much as I do with Amazon Prime, but the logic makes sense.
- shmerl 14y agoI.e. it's a lock in trick? One should avoid such things.
- jonnathanson 14y agoIt depends on how you define "trick." If you're going into it with eyes wide open, you're using it to derive the benefits, and you've got good self-control, then a loyalty program can be very valuable to you as a consumer. If you're going into it expecting benefits, and you find yourself getting carried away and overspending, then it's less valuable to you. I wouldn't call it a trick, so much as I'd call it a loyalty program -- with all the potential risks and rewards that such a term entails. There's nothing necessarily shady or evil about a loyalty program. Indeed, if it makes Amazon a much better consumer experience for you, it can be a win-win.
- _delirium 14y agoIf it was an option, like you can currently choose to buy Amazon gift cards or enroll in Prime, sure. Even an option with incentives. But if you move towards making proprietary currency the only way to pay in a given area, it seems shady to me. Not illegal-type shady, but has-bad-motives-type shady. These kinds of proprietary currencies are a typically deliberate attempt to reduce the transparency of prices, by adding an addition layer of indirection people have to mentally jump through in order to think accurately about and compare them (you can see that in part in how most such currencies pick weird exchange rates, not decimal ones that would be easier to think about).
- peterb 14y agoTwo reasons are float (they get your money before you use the coins) and breakage (they keep lost and/or forgotten coins).
- iguana 14y agoI don't think breakage applies, because I doubt they can keep the the lost/forgotten coins, just like unspent gift card money is not kept by the issuer.
- Lexarius 14y agoBut it does sit in their bank account generating interest until used.
- blackjack48 14y agoIt's more analogous to an indefinite, interest-free loan to Amazon.
- Jtsummers 14y agoInteresting. Per [1] they can't be cashed out or exchanged. So you buy coins, that's the transaction. Amazon is probably then free to do whatever they want with the money. Their only obligation is to later pay out to developers who receive coins as payment. So they're frontloading their earnings. And devs only receive 70% as usual so Amazon gets 30% totally in the clear (no potential future obligations). [1] http://www.digitaltrends.com/mobile/heads-or-tails-amazon-coins-highlight-tradeoffs-of-virtual-currency/ http://www.digitaltrends.com/mobile/heads-or-tails-amazon-co...
- dmiladinov 14y agoIs this any different from how Facebook Credits work(ed)?
- Jtsummers 14y ago
- jcomis 14y agoI think children are a significant use case. Think of a parent handing off a Kindle Fire to their kid with a set balance of coins. They can buy apps and make in app purchases on their own, without having to worry about the kid going hog wild with a linked credit card or something. Just a guess though.
- corin_ 14y agoIt's a solution to that problem, but not the best solution (ignoring separate benefits mentioned by other commenters) - the simplest way to avoid kids spending too much is simply to let parents/owners pre-authorise by making a payment and leaving that balance on the account ready to spend, but still in normal currency.
- fastball 14y agoThat's pretty much the same thing, as it's merely a method of pre-paying for a finite amount of merchandise. The actual best solution would be to allow spending controls, so that, even with a linked credit card, the account can only buy $100 worth of product per month or something.
- alphydan 14y agoThe actual best solution might be to talk to your kids and educate them so they voluntarily don't spend too much ... how innovative and rad is that?
- draz 14y agoDan Ariely mentions these types of products (albeit in the context of cheating): the more removed the product is from real money, the easier it becomes to justify all kinds of actions you normally wouldn't perform: stealing it, spending it, etc.
- dclowd9901 14y agoPaying for content...
- rayiner 14y agoYou can bet marketers are reading through his books looking for ways to hack consumers.
- fyi80 14y agoOr they are reading the same marketing textbooks he is reading.
- fyi80 14y agoPeople don't spend real money?
- draz 14y agoYes, they do. But when they see the money in front of them, they think long and hard about it. When, however, you introduce all kinds of financial instruments, you are no longer seeing money rather some abstract thing, and THAT makes it easier to rationalize all kinds of actions.
- rjh29 14y agoYes, and once you've converted the money to Amazon Coins, you've mentally set it aside to spend (sort of like poker chips) and won't think about your purchases as much as you would with real money.
- dwild 14y agoOn Amazon Payments, the small transaction are more expansive than the bigger one. For example when you pay 0.99$, it's actually 0.893$ = 90.2% (5% + $0.05) but if you pay 20$, it's 19.1287$ = 95.64%. There's 5% more in their pocket.
- dhimes 14y agoIt seems like it might also reduce processing fees to payment processors that charge a flat fee + % of sale. Notably I believe PayPal does this. Here, they would still get their percentage, but would only get one flat-fee for many purchases where before they would have gotten one flat fee for each purchase.
- jib 14y agoLower fraud risk. Extending the time from credit card charge to goods being delivered lowers the risk of chargebacks. Store value without storing money for small transactions. Some countries are finicky about storing money, and its a tight balance to avoid being covered by banking laws. Lowering the barrier for micro-transactions. Customer avoids to repeatedly have to make the decision to spend money, he has spent it once, and now he is just using "virtual credit". Avoiding cost of processing payments. One processing now covers several purchases.
- sangfroid 14y agoNormally I would agree with both of these because they seem to be the reasons other companies introduce currency schemes. But in this case I think it's telling that Amazon first made the announcement on a blog for app developers. My guess is they are trying to attract developers by guaranteeing them a market. If you're interested, I wrote about it in IEEE Spectrum when they first announced Amazon Coins in February. http://spectrum.ieee.org/tech-talk/telecom/internet/amazon-coins-jeff-bezoss-2013-stimulus-bill-for-kindle-fire-developers http://spectrum.ieee.org/tech-talk/telecom/internet/amazon-c...
- DennisP 14y agoMicrosoft paid developers to build apps for their new store. They got a bunch of crappy apps meeting minimum requirements. Amazon created this currency and gives some of it out to users, who can use it to purchase apps for kindle fire. Now Amazon gets to subsidize app development while letting the users decide which apps are worthy. (This analysis isn't original, it's one I read a month or two ago.)
- jacalata 14y agoa month or two ago? Curious, this is the first I've heard of Amazon coins - where was it being talked about so long ago?
- DennisP 14y agoIf I remembered I'd link it.
- xinsight 14y agoAmazon emailed registered app store devs back in February.
- hugoc 14y agoSince Feb 5: http://www.androidpolice.com/2013/02/05/editorial-we-do-not-need-amazon-coins-or-any-virtual-currency/ http://www.androidpolice.com/2013/02/05/editorial-we-do-not-...
- smrtinsert 14y agoYes, we've all played XBox.
- SODaniel 14y agoA HUGE reason for Amazon is to build their own transaction network with control over fee structure, security and implementation.
- bambax 14y agoWhy? Helicopter money, as explained in this excellent post by Slate's brilliant Matthew Yglesias: http://www.slate.com/articles/technology/technology/2013/02/amazon_coins_jeff_bezos_brilliant_plan_to_give_free_money_to_kindle_fire.html http://www.slate.com/articles/technology/technology/2013/02/...