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Originally Posted by TadW
Doesn't Apple sell songs on iTunes for less that what you'd pay in a store - and with a great earnings margin for them? I'd say virtual storage + logistics comes a lot cheaper than physical storage + logistics.
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Apple won't disclose the details, but in one of the last year's analyst conference calls they let slip that itms was not a break-even proposition. It's widely understood that itms is a sales driver for iPods, not the other way around.
In other words, Apple is selling the razors and giving the blades away.
Also bear in mind that the logistics of physcial books are not entirely born by the publisher. Once they ship to the distributors, or to the retailers, the cost of operating the business is no longer theirs to pay.