Thursday, January 20, 2022

How has Amazon constructed its Alexa network, and where does it stand in 2022?

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Amazon is following in the footsteps of other tech behemoths by cutting its percentage of developer revenue from speech apps known as Alexa skills, which operate on Amazon’s smart speakers and other Alexa-enabled devices.

Alexa by Amazon:

Alexa skill creators that generate less than $1 million in income from items like Skill purchases (paid instals), in-skill sales (Alexa’s version of in-app purchases), and skill subscriptions will see their commission cut from 30% to 20% next year, according to the firm.

The modifications will take effect in the second quarter of 2022, and they will be accompanied by an expansion of developer perks aimed at assisting third-party developers in generating traffic and increasing the visibility of their abilities. According to Amazon, the new initiative will be open to Alexa developers who earned less than $1 million in the previous calendar year, as well as new Alexa developers.


Other tech titans, such as Apple, Google, and Microsoft, have made similar measures to change their commission structures for Alexa developer revenue.

Apple reduced its commission rate for small company developers with less than $1 million in App Store revenue over the course of a year to 15% just over a year ago, in response to growing regulatory scrutiny of its App Store operation. Previously, those developers were required to pay Apple’s usual 30% charge.

Google quickly followed after with a similar offer for Google Play, lowering its cut to 15% but differing slightly in how it determined when the lower commissions would apply. Both businesses have recently made additional exceptions to their usual commission rates for specific app categories, such as news publishers and other subscription apps.

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Microsoft also changed its revenue-sharing terms this year to be more beneficial, with an 85/15 revenue split for app developers using its payments platform and an 88/12 revenue split for game makers.

However, Amazon’s Alexa platform isn’t exactly in the same league as these other, more established app ecosystems.

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While Amazon had hoped to create a voice app library to match any other app store, the fact is that few developers have been able to profit on Alexa’s large footprint in American households.

In fact, studies have found that Alexa device owners primarily used their smart speakers and screens for their built-in functions, such as controlling smart home devices, playing music, making shopping lists, setting timers, listening to news, and getting quick updates on things like the weather or sports scores, among other things. Even voice-based shopping, which Amazon anticipated would be enabled via Alexa devices, never took off.

In other words, the adjustments to Amazon’s compensation rates should not be compared to the modifications to other app shops’ regulations.

While Amazon is under pressure to follow market trends to some extent, it clearly expects that lower commissions will encourage Alexa developers to build on its platform.

Amazon also said that under the new programme, which starts next year, it will roll out more advantages aimed at increasing developers’ potential earnings. According to Amazon, these extra benefits might be worth “up to an additional 10%” of a developer’s potential revenue. Incentive programmes, individualised feedback to help developers improve their abilities, assistance identifying monetization options, and more will be available.

Amazon introduces three new tools for Alexa developers

Over the years, Amazon has experimented with direct compensation for top talent developers. For the time being, it’s unclear if the new incentives will be different or just more of the same. More information on the initiative will be released closer to its launch next year, according to Amazon.

Over the last year, the firm has attempted to rekindle interest in skill development by proposing new ways to make Alexa skills profitable. It introduced Paid Skills, in which customers pay a one-time fee to access the add-on voice app, introduced Alexa Shopping Actions, which allows developers to sell from within their skill (and earn affiliate commissions), expanded access to in-skill purchases to more international developers, and reduced the cost of hosting skills to nearly $0.

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