Apple is not in the business to make money selling digital music. Amazon can afford to lose money, but by all accounts, Apple loses money on some of its 99 cent songs anyway.
This does not change the fundamental truth that people do not pay for music. So, have fun, Amazon.
One of Amazon's biggest potential weapons as it takes on Apple's market-dominating iTunes music store: a huge cadre of affiliates which it pays commissions to refer sales. In an email sent to affiliates this morning, Amazon said it would pay a 20% retail commission for MP3 sales through Dec. 31, and a 10% rate thereafter. Apple, meanwhile, offers a 5% commission -- which we don't see changing anytime soon. By linking visitors to Amazon's store, affiliates make about 18 cents per 89-cent download referral, while they would make about 5 cents for referring a sale to iTunes.