In Case You Missed It: AMAZON Will Set The Prices For Paid Apps In Its Android App Store (AMZN, GOOG, AAPL)

Here's something big we missed earlier this month when Amazon was talking about the App Store it's building for Google Android -- and we're not sure it got the attention it deserves.

Amazon itself -- NOT app developers -- will ultimately set the prices for paid apps in its store. That is a big change from what developers are used to (and have grown comfortable with) on the iPhone and Android.

And an iPhone/Android developer we just met with is not sure if they like it. 

(We try to stay super-plugged-in to this topic, so we're surprised we didn't hear more about this.)

Here's how it works: When developers submit apps to Amazon's app store, they will be able to set a suggested retail price ("MSRP"). It can be free, it can be $50, whatever. 

Then Amazon -- not the developer -- will set the retail price. It can be full price, it can be a sale price, or it can be free.

Developers will get to take home the standard 70% of the app's retail price (what the app sells for) or 20% of the MSRP (what the developer thinks it should sell for), whichever is greater.

So if your $10 app is sold for $10, you get $7. If it's sold for $5, you get $3.50. But if it's sold for $1 or free, you're at least guaranteed $2, or 20% of your $10 MSRP.

In theory, Amazon will be able to use whatever sales algorithms it has to generate the most possible revenue (retail price times number of buyers). But developers themselves won't have control over app pricing.

This is sort of like the way Amazon sells other goods, such as paperback books and DVDs, but in this case, Amazon doesn't pay a wholesale price or take physical inventory. And it's the opposite of the "agency model" e-book pricing technique, where publishers themselves set the price of e-books.

This could be a good thing for developers, if it generates more revenue than standard pricing set by the developer.

But it could create some problems. For example, if your app is $10 in the official Android market and $10 in Apple's iPhone app store, but $5 at Amazon's store, it could hurt sales in your other channels where you get more revenue per sale.

Then there's the element of giving up pricing control, which may be more of a subjective, emotional thing to get over than a real problem. But it still may deter some companies from participating.

Read: How Amazon Saved The Kindle

Follow Dan Frommer on Twitter at @fromedome.

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See Also:

• How Amazon Saved The Kindle
• Verizon iPhone: The Biggest Winners And Losers
• 10 Things Apple Must Do Now That It Has Announced The Verizon iPhone

In Case You Missed It: AMAZON Will Set The Prices For Paid Apps In Its Android App Store (AMZN, GOOG, AAPL)

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Demand Media Prices IPO: Could Raise Almost $140 Million

Demand Media has priced its IPO in a new S-1 filing with the SEC, and now estimates the IPO could raise almost $140 million for Demand and its shareholders. (Via Kara Swisher.)

Demand itself expects to raise about $60 million, and could be worth about $1.3 billion after the IPO. (Roughly 5X its 2010 revenue.)

Specifically, Demand Media is offering 4.5 million shares from the company and 3 million shares from current shareholders. And the underwriters -- Goldman Sachs and Morgan Stanley -- have the option to purchase up to another 1.125 million shares from both Demand and its selling stockholders, in what's known as the "greenshoe."

Demand estimates the IPO share price between $14 and $16 per share, which means at the high end of the range, the IPO could be worth almost $140 million.

Demand says, "We expect to receive net proceeds from this offering of approximately $58.1 million, based upon an assumed initial public offering price of $15.00 per share, which is the mid-point of the range set forth on the cover of this prospectus, and after deducting underwriting discounts and estimated offering expenses payable by us."

As Kara Swisher notes, Demand also addresses the controversial accounting techniques it uses to recognize costs over 5 years, a longer period than is typical. It's sticking with them, argues that it's in the company's best financial interest to so do, and says it will regularly review "the operating performance of content published."

One big risk is Demand's reliance on Google for traffic and "a significant portion" of its revenue. The word "Google" is listed 62 times in its S-1 filing.

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See Also:

• Come On, Demand Media, Just Drop The Bogus Accounting
• Demand Media IPO Delayed, Tripped Up By Questionable Accounting Practices
• Here’s Why I Like Demand Media (And Why I Think That Bo Peabody Got It Wrong)

Demand Media Prices IPO: Could Raise Almost $140 Million

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LE WEB: Microsoft M&A chief says they don't buy many companies because Google prices them out of many deals.

LE WEB: Microsoft M&A chief says they don't buy many companies because Google prices them out of many deals.

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LE WEB: Microsoft M&A chief says they don't buy many companies because Google prices them out of many deals.

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Leatherbound Helps You Compare eBook Prices and Availability

Even as eBook sales soar, the experience of browsing and buying eBooks still leaves a lot to be desired. If you are more interested in a particular title than in your loyalty to a particular eReader, looking for the cheapest version - or even an available version - of a book can be pretty tedious.

Is it even in the iBookstore? Is it cheaper on Amazon's Kindle or on the Barnes & Noble Nook?

Leatherbound addresses that problem by giving users a site where they can look for titles and compare their prices for Kindle, Nook, and iBook. Enter an author name or title, and the site responds with price, availability, and a link to the appropriate eBookstore. Quick and simple.

Sponsor

Leatherbound was created this weekend as part of the Rails Rumble, a programming competition that gives teams 48 hours to build a web app in Ruby on Rails.

Team Leatherbound is comprised of Andrew Dumont, Nathan Carnes, Adrian Pike, and Amiel Martin. Dumont, who is also the Director of Business Development at Seesmic, says that the team has plans down the road to add movies and music to the apps' search capabilities. However, as judging for the Rails Rumble competition is going on now, the project has to stay "as is."

But for a weekend project, Leatherbound's "as is" is pretty good.

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