iTunes affiliates profits

BusinessWeek says:

When customers buy songs from Apple's iTunes music store, they pay 99¢ a tune. But Apple only gets about 4¢ of that, after paying the record company and others, says researcher Strategy Analytics [BusinessWeek, by way of MacInTouch]

While Apple says:

As an iTunes Affiliate, you can.... Earn 5% commission on all qualifying revenue generated by links to iTunes on your website and in email (terms apply). [Apple]

Those numbers don't seem to add up to a lot of profit for Apple on music sales through affiliates.

If the 4% mentioned in the BusinessWeek article is net profit, and if the 96% overhead is largely made up of fixed costs, then even if they give affiliates 5%, they could make a profit for each affiliate sales because the fixed-overhead-per-sale goes down if there are more sales. But a lot of their costs are not fixed. The fee paid to the labels isn't fixed, and the bandwidth and hardware requirements aren't fixed. And customer support isn't fixed. The main thing that's fixed would have to be the software development costs.

If 80% of the costs were per-sale-costs, it seems they'd just about break even, unless I'm making some error.

I'd be slightly surprised if less than 80% of the costs are per-sale costs.

Seems like they are making very little if any profit on affiliate sales.

Actually, it's consistent overall with Apple's claims that they don't expect iTunes to make them money in itself; they say their profits are in the way the music store drives iPod sales (and mac sales through the "halo effect").