Amazon MP3 Explains Why It’s Smart To Lose Money Selling 69 Cent Tracks

Last week Amazon began selling more that half the songs in its Top 100 for 69 cents. Industry observers speculated then that the internet giant cut prices (and according to our sources continues to pay labels regular wholesale) to grab market share from iTune's . But their strategy is more complex, according to Craig Pape, the director of Amazon Music.

Cutting prices creates a "halo effect" that does help music sales. But just as importantly, it also improves the site's music recommendation engine, says Pape. Better music recommendation and discovery is beleived to be a major draw for consumers navigating rapidly growing music catalogs. Amazon currently offers more than 15 million tracks and 1.5 million albums. 

69 cent trackes will "give a boost that lasts into the future," said Pape..