• by Steve Smith  @popeyesm, April 11, 2012

As previews in recent weeks have indicated, Amazon has been working on enhancing its app store business models with in-app sales functionality in order to ride one of the most lucrative waves in m-commerce. The company announced formally this week that its “In-App Purchasing” (“IAP”) service is now available as an API in apps for the Kindle Fire and the Amazon Android app store. Essentially, the new content sales features bring Amazon’s devices and app distribution mechanism in line with the Apple App Store.

Users now can buy upgrades and items from within an app using Amazon’s integrated and seamless e-commerce engine. This new capability also includes subscriptions so magazines and newspapers can upsell subs from within the app rather than sell or trial a subscription at the point of first download. Amazon has delivered strong revenue per user to developers since the Kindle Fire came out, in part because Amazon maintained a tight control on the apps available and required up-front purchases. The new in-app models free developers to experiment more with freemium approaches.

A number of publishers have already incorporated the API, including Disney, ZeptoLab, Glu Mobile, Conde Nast, G5 Entertainment, Dow Jones and the NY Post. In the announcement, partner G5 (“Virtual City Playground” and “MahJongg Artifacts”) said that it is already seeing higher conversions and revenues from the new model.

The new lure for developers comes at a time when growth of new apps in Amazon's market may be slowing. According to a new study from Strategy analytics, only 6,000 new apps were added to Amazon's catalog in the last quarter, while 15,000 had been added towards the end of 2011 when the Kindle Fire launched. 

Keeping developers happy and well-financed is going to be critical as independent app stores and the rival Windows 8 platform emerge. According to the most recent research from Distimo on the top-selling apps in iOS and Android markets, over 60% of revenue from app sales are now being generated from in-app purchases.