Jupiter Research has published a report examining the different ways in which digital music distribution services can become profitable. The report stresses alternative payment systems as "more likely" to produce profit.
Alternative ways to make money – new digital rights management options or reduced royalties take second place. The report is called "99-cent digital singles: market opportunity and value chain". It asks how anyone can make money on 99 cent downloads, and what factors may change current digital distribution economics.
As is known, labels take approximately 65 cents in every 99 cents for their tracks. What remains is swallowed up in management, infrastructure and delivery (bandwidth) charges.
A sizeable one or two per cent is paid in fees to credit card agencies – and that's what Jupiter Research sees as the sweet spot for a quick and easy profit boost.
The report's primary suggestion is that services use PayPal or other alternative payment systems to avoid high credit-card fees, and observes that multiple song sales are more likely to produce profit margins.