It’s a Virtual Currency! It’s an Old-Fashioned Marketing Campaign! It’s Both!

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Amazon announced today that it will soon launch Amazon Coins, a new “virtual currency” that customers can use to buy stuff on their Kindles. They’re planning to give away tens of millions of dollars worth of Amazon Coins. Matt Yglesias comments:

Each Amazon coin is worth one cent and can be redeemed by Kindle store vendors. In macroeconomic terms, you can think of this as a program of aggressive monetary expansion to stimulate the Kindle Fire economy. By delivering a helicopter drop of Amazon Coins to Kindle owners, Amazon is hoping to boost consumption of Kindle Fire content. Not for the sake of increasing consumption as such, but because higher expected demand for Kindle Fire content should stimulate investment by third-party firms in the development of Kindle content. In that sense, the monetary stimulus isn’t merely a short-term expedient to make Kindle owners happy. It’s part of a longer-term strategy to strengthen the overall Kindle platform (and increase its differentiation from generic Android) by exploiting the positive feedback dynamic between market size, app quality and quantity, and desirability of joining the market.

Matt writes an economics blog, so he talks about this in economic terms, something that Amazon is encouraging by calling their coins “virtual currency.” My background is in marketing, so I say bravo to Amazon for a clever marketing stunt. Amazon Coins are no more a virtual currency than frequent flyer miles or the coupons that you clip out of the Sunday paper, but it sure sounds cool to call it that! After all, virtual currencies are considered sort of a hot topic these days.

Alternatively, of course, you could say that both frequent flyer miles and newspaper coupons are virtual currencies too and always have been. It’s just that nobody’s been smart enough to call them that. And I suppose that’s true. Either way, Amazon isn’t really doing anything new here. They’re just pouring a bunch of marketing dollars into a launch promotion for one of their new products. If it works, every new marketing campaign that involves building up points or credits or loyalty bucks or whatnot will suddenly become the latest virtual currency. I expect the primary result of this will be a bubble in doctoral dissertations on closed economies on the internet.

MOTHER JONES NEEDS YOUR HELP

We have about a $170,000 funding gap and less than a week to go in our hugely important First $500,000 fundraising campaign that ends Saturday. We urgently need your help, and a lot of help, so we can pay for the one-of-a-kind journalism you get from us.

Learn more in “Less Dreading, More Doing,” where we lay out this wild moment and how we can keep charging hard for you. And please help if you can: $5, $50, or $500—every gift from every person truly matters right now.

payment methods

MOTHER JONES NEEDS YOUR HELP

We have about a $170,000 funding gap and less than a week to go in our hugely important First $500,000 fundraising campaign that ends Saturday. We urgently need your help, and a lot of help, so we can pay for the one-of-a-kind journalism you get from us.

Learn more in “Less Dreading, More Doing,” where we lay out this wild moment and how we can keep charging hard for you. And please help if you can: $5, $50, or $500—every gift from every person truly matters right now.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate