Earlier quoted context omitted.
My understanding is Apple doesn't make all that much money off the iTunes Store using a similar model. Does it really work for digital media? (besides console games)
Apple doesn't use a similar model, they use the exact opposite model. They sell content at minimal profit to enhance the ecosystem for their devices, which they make a very tidy profit on.
How so? From what I've seen the prices on the iTunes Store for books, movies and music are higher than Amazon.