Amazon Coins for Kindle

To encourage more user activity and spending, Amazon announced Wednesday that it would be introducing a virtual currency called Amazon Coins. Kindle Fire users can expect some free coins this May, as Amazon gives away tens of millions of dollars worth of the coins during the launch of the currency. With these coins, you will be able to purchase apps, games, and in-app items. Amazon is in hopes that these coins will entice users to try out new apps, be pleased with their purchases and in turn generate more revenue through Kindle Fire.

The Amazon Currency Value

The coins will have a value of 1 US cent. In other words, to purchase an app worth $1.99, you will need 199 Amazon coins. The revenue from the coins will be shared in a 70-30 split between Amazon and the developers, Amazon receiving 30 percent and the developers being paid 70 percent.

The app developers who already offer merchandise in the Amazon Appstore are all set up and ready to go with the new coins. However, new developers who want in on this opportunity must submit their apps by April 25^th.

Benefits of the virtual coins

Amazon is hopeful that the coins will prove as profitable as the virtual Facebook currency. However, Facebook does seem more suited to a currency than Amazon because of their vast selection of games, which is where most of Facebook users spend their time and money. But, Amazon is positive that this marketing ploy will become an asset to its developers.

When a company mints their own virtual money, buyers are naturally drawn to the offer. After all, most people are more comfortable purchasing with virtual coins, than real ones. And similar to the credit card effect, shoppers tend to spend more when not using cash.

While Facebook has been very successful with their currency, this is not true for all companies who have tried this strategy. Only time will tell if this idea will be beneficial for Amazon and Kindle, as well.

[Image via slate]