Amazon CEO Jeff Bezos unveils the Amazon Fire Phone. AP Photo/Ted S. Warren Amazon's Underground App Store, which launched in August, gives away thousands of paid-for apps for free. The store pays a developer for each minute a user uses the app.

The model costs Amazon a lot of money, but the company hopes it will put it ahead of the offerings from Google's Play Store and Apple's App Store.

Aaron Rubenson, the director of Amazon's App Store, told The Inquirer how the model works.

"We heard [from customers] that there are so many apps and games out there it's difficult to know which ones are of good quality and which are worth spending money on," he said. Making all apps free, and then paying developers themselves, removes this problem.

"We also heard frustration with the freemium model," he said. "Some developers told us that they would rather charge upfront, and for those that had adopted the freemium model found that only two to three percent of customers actually purchased [the app]. Somehow the industry had evolved to the point that for content creators it had become a difficult place."

Underground currently gives away over 1,500 apps, including "Angry Birds," "Cut the Rope," and "Star Wars: Knights of the Old Republic," which costs £7.99 ($13.99) on the iPhone.

Rubenson explained how the deal — which sees Amazon pay developers — works for the company.

"This is good for Amazon in a couple of ways," he said. "Firstly, this is also the Amazon shopping app. We hope people engage with Underground often and when they do, discover the other great things that we offer and some will go on to buy other goods."

Essentially, Amazon is leveraging the goodwill that Underground creates to use elsewhere. If people see Amazon as a giving company, they may be more inclined to buy things.

Rubsenson continued: "There's a lot for us in driving high frequency engagement with the mobile channel. The other way is that when customers download apps and games, occasionally we'll show an advert. They're before the start-up sequence, they never ruin the flow of the game, its not often, but that's another way."

And here is the other way: Amazon can monetise the experience via adverts.