amazon mp3 payments to artists?

I’ve been scouring the internet for this information, but no luck so far, so I’ll ask here in hopes something will come of it.

Amazon is charging less (in some cases significantly less) for their mp3 music service than the same album in physical media. The question is: where is that reduced cost coming from? Out of the pockets of the distributors (as a result of lower media costs), or of the artists (as a result of…?) There is at least anecdotal evidence that artists make significantly less when you buy their album from iTunes than when you buy the same CD, which is insane. Does Amazon’s mp3 service have the same problem?

I’m otherwise leaning in the direction of becoming a regular user of Amazon’s mp3 service- no DRM, increased convenience, and lower costs is exactly what should be happening to the music industry right now, and Amazon is doing all of those. But if that actually improves the position of the labels at the expense of artists… ewww. I want to pay artists for their art, not distributors for their 20th century marketing and overhead, and if Amazon makes that harder rather than easier… Not Cool.

(I realize there are issues with mp3s as a closed standard, but that’s a post for another way.)