Amazon’s New “Currency Bet”

Today Amazon waded into the world of online currency granting a gift of 500 free “Amazon Coins” to owners of its Kindle Fire. The coins will act as a sort of online currency within the Amazon environment. The idea is that the new coins will make it easier for Amazon customers to purchase applications through Amazon, and that the same customers will be more likely to transact purchases on Amazon instead of looking elsewhere due to that ease of use. Amazon Coins have been given a valuation by the company based on a bulk rate with 1,000 coins costing $10, 10,000 for $100, et cetera. However, customers can currently purchase the coins in bulk at a 10% discount providing instant savings. There is no expiration date on the new online currency and no transaction fee for the purchase. At this point Amazon customers can’t purchase other products such as books, movies and music using the coins, but those plans may be in the works. Another benefit is that application developers now can factor in the new currency as part of monetization plans without any additional integration efforts. Microsoft, which has also experimented with its own online currency, recently made a decision to phase out the offering while Facebook has also punted on its credits platform in favor of another approach based on local currencies. However, Amazon’s larger ecosystem of products and services may distinguish Amazon Coins from other efforts. Time will tell.