Amazon Trounces iTunes Store Commissions

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Amazon may sell iTunes-friendly downloads, but the ecommerce giant is playing a less-than-friendly game with Apple.

Just recently, Apple dropped pricing on its DRM-free downloads, from $1.29 to $0.99, a shift that closely followed the entrance of Amazon into the digital download game.  Now, Amazon is rallying third-party affiliates by offering a very generous, 20 percent commission on all resulting sales through the end of this year.

After that point, commissions will move to 10 percent, according to the company.  Still, that beats the Apple payoff of 5 percent, a longtime commission.  But the 20 percent payout will be a wallet-buster, and a money-losing proposition.  Amazon sells downloads for as low as 89-cents, and that spells a referral fee of 18-cents.  The remaining residual is 71 cents, a value that barely covers the per-download licensing cost paid to content owners.

Report by news analyst Alexandra Osorio.