[Swordmaker]

“iTunes isn’t a money making venture, at least not for Apple, not directly. iTunes serves Apple best as a marketing tool, promoting their brand and maintaining their dominance in the technology and media markets.”

It started as a break even . . . but it isn't now. It is very profitable.

[TexasGator]

“It started as a break even . . . but it isn’t now. It is very profitable. “

Not due to music sales which they are keeping artificially low but due to software sales which have margins of about 50%.