Apple taunts Napster, Real with iTunes affiliate program

Happy to lose cash

Apple continues to make a mockery of the music downloading scene, kicking off a new program today that allows partners to earn money by hawking iTunes songs.

The iTunes affiliate program lets web sites place links to iTunes songs, albums and artists and then earn a 5 percent commission for clicks that turn into sales. This program complements existing iTunes deals for bulk music purchase discounts and free site licenses for iTunes at universities. Apple's unique position in the music download market as owner of the iPod allows it to capitalize on low-margin music sales in ways that companies such as Napster and Real can't.

Napster, for example, has been pursuing one of the more crooked avenues in the online market by going after universities. The company has given huge discounts to a handful of schools, allowing students at the institutions to rent as much music as they like for around $2 per student per month. Napster admits this practice has failed to generate any meaningful profits.

Companies such as Napster that sell only music and almost no hardware are gated by the music labels. The labels scrape off the majority of the money raised from online music sales, leaving Napster and the like to fight over the copper scraps.

Apple, by contrast, can tease these vendors by happily taking losses on music sales and then pulling in bank loads of cash selling iPods. While other flash MP3 players exist, the iPod clearly dominates the market with no slowdown in sight. This leaves Apple embracing the vacuous music market, teasing Napster and Real with things like the new affiliate program.

Details on the program are available here. Sites with naughty language, dirty pictures, copyrighted material or less than 1,000 visitors per month need not apply. ®

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