Amazon to Lower Alexa Skill Developer Revenue Share

Amazon Adjusts Revenue Sharing for Alexa Skills

Amazon is aligning with other major technology companies by reducing the percentage it takes from developer earnings generated by Alexa skills. These voice applications function on Amazon’s smart speakers and other devices powered by Alexa.

The company announced this week that, starting next year, its commission will decrease from 30% to 20% for developers of Alexa skills who earn under $1 million annually. This revenue includes income from Skill purchases, in-skill purchases, and skill subscriptions.

Implementation and Eligibility

These changes will be implemented in the second quarter of 2022. Alongside the commission reduction, Amazon will expand developer benefits to boost traffic and improve skill visibility.

Developers earning less than $1 million in the preceding calendar year, as well as new Alexa developers, will qualify for this new program.

Following Industry Trends

Amazon’s update to its commission structure mirrors similar actions taken by industry leaders like Apple, Google, and Microsoft.

Over a year ago, Apple responded to increased scrutiny of its App Store practices by lowering its commission to 15% for small businesses earning less than $1 million in annual App Store revenue. Google subsequently introduced a comparable program for Google Play, also reducing its commission to 15%, though with slightly different calculation criteria.

Both companies have further refined their commission rates for specific app categories, including news publishers and subscription-based applications.

Microsoft's Approach

Microsoft also revised its revenue share terms this year, offering an 85/15 split for app developers utilizing its payment platform and an 88/12 split for game developers.

Alexa's Unique Position

However, Amazon’s Alexa platform doesn’t currently hold the same prominence as these larger app ecosystems.

Despite initial ambitions for a voice app catalog comparable to other app stores, few developers have successfully leveraged Alexa’s market presence to establish profitable businesses.

Challenges with Skill Discovery

Amazon has faced ongoing challenges with skill discovery. Studies indicate that users primarily utilize Alexa devices for core functionalities like controlling smart home devices, playing music, managing shopping lists, setting timers, and accessing news or weather updates.

Voice-based shopping, a key area Amazon hoped to develop through Alexa, has not achieved widespread adoption.

Therefore, Amazon’s commission adjustment should be viewed differently than changes in other app stores. While market pressure likely plays a role, Amazon also aims to incentivize developers to create for its platform.

Additional Developer Benefits

Amazon announced that it will introduce additional benefits to enhance developers’ potential revenue under the new program launching next year.

These benefits, potentially worth “up to an additional 10 percent” of a developer’s revenue, will include incentive programs, personalized feedback for skill optimization, and assistance in identifying monetization opportunities.

Past and Future Incentives

Amazon has previously offered direct payments to top skill developers. It remains to be seen whether the new incentives will differ or represent a continuation of existing efforts. Further details will be released closer to the program’s launch.

Over the past year, Amazon has actively sought to revitalize interest in skill development. This includes launching Paid Skills, introducing Alexa Shopping Actions for affiliate income, expanding in-skill purchase access internationally, and significantly reducing skill hosting costs.