The developers consented because they thought they were getting paid for it:
Wrong. Reread the article.
Exactly. They understood they weren't
going to get paid but decided to go along with Amazon's arrangement despite their reservations about it.
Although Amazon allegedly paints a false public picture
about how the Free App o' the Day works revenue wise - when it comes down to signing on the dotted line, they are quite explicit
about the fact that Amazon will not
be compensating the developer for its participation in the giveaway program. To wit:
The Free App of the Day promotion is the most valuable and visible spot in the store. It hosted the launch of the likes of Angry Birds Rio, Plants v. Zombies and more. Amazon will not receive any sales rev share from the Free App of the Day; and in fact, with as the Free of the Day for one day, you will receive a subsequent Appstore main page placement for the following 14 days.
All these highly valuable placements are at no cost to you. We want to promote your app and in exchange of the placements, at the 0% rev share for one day only.
I had to reread that section in the blog post myself just to be sure I understood what was being said.
The author of the article basically argues that Amazon leads developers on with false expectations about how the giveaway works along with whatever direct benefits the developer can expect by participating. But he's also careful to admit that, whatever the spiel
Amazon is spinning, his company knew, going in, that they weren't going to get paid for whatever got downloaded.
Again, I think the lesson in the story isn't that Amazon is a bunch of lying scoundrels - although the author does make some gestures in that direction. The real lesson is that small developers need to be careful whenever they're dealing with a big distributor - or have the potential for a major demand spike because of the deal they're offering.
A few years back, Codeweavers offered a free copy of their extremely popular CrossOver
emulator if any one of several improbable news events occurred within a given time frame. When one of them (and not even the most likely one) did come to pass, Codeweavers had so many free licenses registered in the wake of it that they were very much in danger of going out of business - because it now looked like anybody (including businesses) who might possibly consider purchasing or upgrading copies of CrossOver
now had free licenses for it.
To Codeweaver's credit, they honored their deal anyway, and ultimately rode out the storm - emerging significantly poorer - but infinitely wiser from the ordeal.
Here's a summary of the story at Wikipedia
Great American Lame Duck Presidential Challenge
In July 2008, CodeWeavers launched the Great American Lame Duck Presidential Challenge to encourage President Bush to make the most of his remaining days in office by accomplishing a major economic or political goal by January 20, 2009.
The goals focused on President Bush making specific positive accomplishments in areas such as the economy, home values, the stock market, the war on terror and other key issues. Specifically, one goal called for President Bush to help bring down average gasoline prices in the Twin Cities to $2.79 a gallon.
On October 14, gas prices in Minneapolis and St. Paul did just that. CodeWeavers were true to their word, and on October 28, a combination of Slashdot and Digg took down their website as people rushed to get the gratis software. According to CodeWeavers, "You will be able to unlock your serial number that was emailed to you for an extended time, (an additional 48 hours), due to this downtime. We will simply stop giving out new serial numbers at 23:59 (Midnight) Central Standard Time." 
Additionally, CodeWeavers updated their site @ ~ 9:00 AM CST (GMT - 6) to reflect the statement: "Please check back again for registration code information later today. We will be deploying a streamlined serial code generation process shortly." At the same time, they also added an "about Wine" paragraph.
The streamlined process came to pass, but customers were told to expect to wait "several days" to receive their serial number. In the interim, fully unlocked (full builds) of four different CodeWeavers packages became available for immediate download, but only on October 28, 2008
This situation has been handled in a less ethical (and possibly legal) manner by many small software developers who offered "lifetime" licenses or upgrades and then resorted to semantic shell games and other forms of legerdemain in order to not honor their deals once the financial impact began to be felt.
So know what you're getting into (in real terms) before you go in on something with a behemoth like Amazon.
As one of my
business mentors once told me: Don't ever let your mouth write a check your ass can't cover.