John Paczkowski

Recent Posts by John Paczkowski

What’s Amazon’s Master Plan for Coins?

Amazon_CoinsAmazon tentatively dipped its toe into the virtual currency business today, rolling out Coins, a token system intended as “an easy way” for Kindle Fire users to buy apps, games and in-app items.* And to promote the move, it’s offering a giveaway: 500 Coins to every Kindle Fire customer.

That’s $5 worth of Coins each, a promotion Amazon says will cost it “tens of millions of dollars.” That’s a lot of real money to spend to generate buzz for yet another virtual currency, but Amazon has good reason to do so.

Like other virtual currencies — Facebook credits, for example — Coins is notional, which makes it easier to spend. As in gambling, the abstraction of converting real money into virtual money makes it harder to keep track of how much of the former you’re actually doling out. And, of course, once you purchase Coins from Amazon, it becomes the only place to redeem them. (Note: When you buy an item with Coins on which Amazon is required to charge sales tax, Coins are used to pay sales tax.)

The implications of that are interesting. Right now, Amazon accepts Coins for apps, games and in-app purchases, but the company has plans to extend beyond that. Said Amazon VP of apps and games Mike George, “We will continue to add more ways to earn and spend Coins on a wider range of content and activities.”

Is the master plan here to extend Coins beyond digital goods to all purchases on Amazon.com? If the company is able to use the currency for virtual and digital goods, surely it’s capable of using it for real-world ones as well. Will it? We’ll see in the months ahead.

* Amazon will continue to accept traditional forms of payment for apps and games.


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— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google