"Apple Computer launched its iTunes Music Store for Windows amid much fanfare, but the company said it doesn't have any illusions that it can make great profits from selling songs over the Internet. Instead, Apple is counting on the store as a key part of an overall music business for the company that can produce substantial profits--mainly through sales of its iPod digital music player. "The iPod makes money. The iTunes Music Store doesn't," Apple Senior Vice President Phil Schiller told CNET News.com in an interview Thursday after the launch of the Windows version of the store. Schiller said the music store is close to profitability but is still losing money. Apple doesn't see the business as having much long-term profit potential either."
And no, the music downloaded from Napster 2.0 is not playable on an IPod... they use incompatible file formats.
One more thing, AlphaWolf, where did you see that more songs are bought online than in music stores? Maybe with "singles" or something? If you mean overall songs from albums, box sets, etc, I'd be shocked.