Amazon gives bloggers a sweeter deal for selling its MP3s

October 17, 2007: 12:00 PM ET
Amazon Associates example
Above: an example of an MP3 ad an Amazon Associate might run.

Amazon (AMZN) today is pulling out the small guns as it positions its new MP3 download store to grab market share from Apple's (AAPL) iTunes. And Amazon has a lot of small guns.

In this case, "The small guns" refers to the Amazon.com Associates Program, one of the retailer's lesser-known online marketing vehicles. Through Amazon Associates, bloggers and other online publishers can showcase Amazon products in an advertising window on their sites. In return, they earn a cut of the sale – usually 10 percent.

To give a boost to its MP3 store, though, Amazon today sent an e-mail to Associates members that sweetens the deal: Through the end of the year, Amazon will give a 20 percent cut to members who get people to download songs from the Amazon store.

If the doubled incentive proves popular with Amazon's online publisher community, it could drive real results. Amazon has said it has more than 1 million users signed up for the Associates program, though it's not clear how many of those users are active.

Amazon's Associates gambit is the latest sign that competition to sell MP3 downloads is heating up. Amazon's move comes just a day after Apple dropped the price of its own MP3 downloads to 99 cents from $1.29. Apple spokeswoman Natalie Kerris said Apple didn't cut its MP3 download prices because of pressure from the likes of Amazon – but it's hard to ignore the fact that Amazon and Apple, two of the biggest names in online commerce, are now going after the same pot of download dollars. (Of note: Microsoft (MSFT) also said earlier this month that it will begin selling unprotected MP3s in an online store later this year.)

Below, an excerpt from the message Amazon sent to Associates:

Amazon MP3 (http://www.amazonmp3.com) offers Earth's biggest selection of a la carte, DRM-free MP3 music downloads. With over 2 million songs from more than 180,000 artists represented by over 20,000 major and independent labels, Amazon MP3 complements Amazon.com's existing selection of over 1 million CDs to offer customers more selection of physical and digital music than any other retailer.

Every song and album on Amazon MP3 is available exclusively in the MP3 format without digital rights management (DRM) software. This means that Amazon MP3 customers are free to enjoy their music downloads using any hardware device, organize their music using any music management application, and burn songs to CDs.

Most songs are priced from 89 cents to 99 cents, with more than 1 million of the 2 million songs priced at 89 cents. The top 100 best-selling songs are 89 cents, unless marked otherwise. Most albums are priced from $5.99 to $9.99. The top 100 best-selling albums are $8.99 or less, unless marked otherwise.

Every song on Amazon MP3 is encoded at 256 kilobits per second, which gives customers high audio quality at a manageable file size.

Through December 31, 2007 Associates are eligible to earn 20% on all MP3 referrals (up to $1.50 per item). Beginning January 1, 2008 the referral fees will be 10%. There is no limit to the number of items on which referral fees are earned.

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