The move gives the developers an opportunity to earn more money through in-app upgrades, expansions, subscriptions (essential to publishers) and virtual good purchases. It also makes Amazon's Appstore more competitive with Apple's and Google's app stores, both of which have enabled in-app purchasing since spring 2009 and spring 2011, respectively.
Like Apple and Google, Amazon will keep 30% of all revenue generated through in-app purchases.
Developers and publishers including Disney, Gameloft, G5 Entertainment, Conde Nast and Dow Jones were given early access to Amazon's in-app purchasing API, and will begin offering in-app purchases Tuesday. In a statement, Larissa McCleary, director of marketing at G5 Entertainment, noted that enabling in-app purchases upped conversion rates and revenue in all of the games G5 offers in the Amazon Appstore.
In-app purchases are becoming an increasingly important source of revenue for developers. According to a study conducted by IHS, in-app purchases generated $970 million in revenue in 2011, accounting for 39% of all smartphone app revenue that year. Those figures are only expected to grow, bringing in $5.6 billion -- 64% of all smartphone app revenue -- in 2015.
Amazon released the above video to introduce developers to its new, in-app purchasing service.