Their explanation is too mechanical. One reason people "flatter" people to their faces is quite simply empathy. When you are confronted with "art" from an artist whose work frankly sucks, you almost never give your true opinion. This is not because you hope to gain something from the artist. This is because people are trained not to hurt each other's feelings.

4-5 is right around when children start to develop empathy.

Crying wolf just makes people ignore you when the wolves show up.

You can tell if they are watermarking per purchaser by buying the same track under two different accounts and seeing if they are different. IIRC, people have and found no differences.

It is very likely that these tracks are watermarked before they are given to Amazon, but this would not be a watermark that different per-user and so has no real privacy implications.

Both iTunes and the Windows shell have no trouble at all reading the track information from an Amazon purchased track. Neither does id3tool on a base ubuntu install.

It could depend on the file, I suppose. I tried this on the first song on The White Stripes "Conquest" EP, which I bought from Amazon a couple weeks ago.

They do embed a "Amazon.com Song ID" in the comment field. That would be trivial to strip.