Amazon Increases Payout for Music Downloads

Amazon.com is offering affiliates a higher payout on Amazon MP3 music downloads to compete with Apple’s iTunes. At Amazon they call affiliates associates and typically their payouts aren’t very high – around 6%. But to boost adoption of their music downloads they are offering 20% commissions until January 2008.

Compare that to Apple that offers 5% commissions on iTunes. They also priced the downloads slightly lower – some are 98 cents at Amazon while iTunes are at 99 cents. Beginning on January 1st, commissions will drop to 10%, still double that of iTunes.

Amazon has one of the earliest and largest affiliate programs on the internet. Now some of those affiliates have an incentive to promote music along with Amazon’s other offerings.

In response, iTunes recently dropped the prices on DRM-free tracks to 99 cents from $1.29. They are also adding more than two million DRM-free songs to the iTunes Plus service. Total inventory is about 5 million songs to Amazon’s 2 million.

Amazon’s downloads are all DRM-free. Affiliates and customers are winners here. As far as artists and record companies, it’s already an extremely competitive market.