Business Insider and author of TFA, Dan Frommer, got several details wrong.
TLDR; Amazon prevents you from selling for cheaper on other outlets, or giving away free downloads or FOSS if you want to charge on the Amazon Appstore.
(Snipped down.) When developers will be able to set a suggested retail price ('MSRP'). Then Amazon will set the retail price. Developers will get to take home the standard 70% of the app's retail price (what the app sells for) or 20% of the MSRP (what the developer thinks it should sell for), whichever is greater.
What does "MSRP" mean?
In the retail business (that's where the "R" in "MSRP" comes from) retailers make speculations on how many units they can sell at what prices over what period of time, compare to actual or theoretical negotiated bulk prices for purchasing from a manufacturer or wholesaler, and then decide whether or not it meets their profit expectations. It can be a little more complex than this, but this is the gist of it.
Well, the article linked to by Slashdot does not help you find Amazon's justification for using the terms "MSRP" or "SRP." My research, which may be incomplete, indicates that Amazon is not using this term, and rightly so. Here is an excerpt from Amazon's Appstore Distribution Agreement, which you can see in PDF form here (MD5 checksum 15636c42ecfb47dc819445ad3214eac4, just in case they change the file in the future without renaming it.)
Section 2a of Amazon's Appstore Distribution Agreement
For each sale of an App, we will pay you a royalty (“Royalty”) equal to the greater of (i) 70% of the purchase price or (ii) 20% of the List Price.
Ok, so what we're actually dealing with is called a "List Price" in the legal agreement to supply Amazon's new App Store. This is a more correct term, because an MSRP is legally unrelated to the price a retailer secures from their supplier for units of the product. It's clear though that this "List Price" bears legal weight in determining the PPU (price per unit) of the product from the supplier (or, developer, I guess.)
So at this point what we have established is that the "List Price" in fact has no bearing on what the app will be sold for, but is defined to be five times the minimum PPU the developer is paid.
Here is a really important detail that Business Insider and author of TFA, Dan Frommer, glossed over:
..if your app is $10 in the official Android market and $10 in Apple's iPhone app store, but $5 at Amazon's store, it could hurt sales in your other channels where you get more revenue per sale.
Somehow, even managing to discuss the situation in which you set your prices differently for different sales outlets, Business Insider and Dan Frommer miss this juicy tidbit:
Section 5i of Amazon's Appstore Distribution Agreement
The “List Price” for an App is an amount that does not exceed, at any time, the lowest list price or suggested retail price for such App (including any similar edition, version or release) available on any Similar Service or the lowest actual price at which you make such App available for sale through any Similar Service. You will update the List Price for each App as necessary to ensure that it meets the requirements of this section 5i.
"List Price," then, is not simply five times the minimum PPU you wish to be paid (which would effectively allow you to actually set the price you want to sell at, which would be nice) but is in fact a function of what price you are offering, but a function of the price your app is available for at different outlets! This means if your app is on multiple outlets, Amazon takes away your ability to set your price through the List Price, and even takes away your ability to offer a better price at another sales outlet.
This is particularly troubling because it means that you cannot set your price as a function of favoritism. For instance if you had more grievances with Amazon than another market, you cannot favor the market you like more with a better price.
Along that vein, this part that Business Insider was not likely to mention (because Software Freedom doesn't matter to them)
Section 2a of Amazon's Appstore Distribution Agreement
No Royalty is payable for Apps with a List Price of $0.00.
and..
Section 3a of Amazon's Appstore Distribution Agreement
A “Similar Service” is any online distribution
service that makes Apps available for sale or download to end users in the Territory using a mode of distribution similar to
those used by this program, including any mobile or Internetbased application marketing, sales and distribution service.
So, to combine the language in a way that makes this unequivocally clear: "The 'List Price' for an App is an amount that does not exceed, at any time, the lowest price for an App available on any online distribution service that makes Apps available for download."
Given that a future version of Kindle will probably only come with the Amazon Appstore, it was probably a thought that many of us had that we would indulge unconcerned consumers their desire to buy apps from Amazon, and make a profit in the process. Apparently if your App is free to download from anywhere else, or it is free, open source software, Amazon is not going to pay you a dime.