Online shopping giant Amazon has launched a music downloading referral service that offers affiliate websites incentives that are four times higher than Apple's iTunes.

When Amazon decided to tackle the world of music downloading, it was obvious that its chief target would be iTunes. And while many believed Amazon would be able to coax nice deals from record labels, the key to its strategy seems in fact to be the use of its referral system to gain an edge over Apple's iTunes Store by offering incentives to sites that link to the Amazon MP3 store.

In a statement released to members of its Associates program, Amazon explained that each referrer could earn 20 per cent for every referred Amazon MP3 sale through the end of 2007. The company went on to explain that up to $1.50 per transaction would go to the affiliate.

DRM-free music cheaper than many iTunes tracks

The move comes just a few weeks after the Amazon service was launched to much fanfare. Upon its arrival, users were pleasantly surprised to see a complete DRM-free service that undercut Apple's iTunes by $0.30 for comparable tracks.

In response to Amazon's pricing scheme, Apple recently announced that it will begin selling DRM-free music at $0.99 to better compete with the Amazon service.

The news will come as a bit of a surprise to some, including Apple affiliates who receive just a 5 per cent share of revenue. By increasing revenue sharing to such a degree, Amazon hopes it will be able to enjoy the benefits of more links to the site and start to crack iTunes' sturdy foundation.

Apple has also taken Amazon to task for the quantity of unprotected tracks it offers, as many of the songs on Amazon's service come from independent labels.

This after Amazon was able to court Universal Music to its service, with all of its songs DRM-free. Some may recall that Universal Music refused to extend its long-term contract with Apple, with speculation that the move was designed to curb Apple's dominance in the music download market.

The Amazon referral program is expected to begin immediately.