To answer Ruth Archer's question with specific numbers, here they are. I'm using CD Baby (US distribution company) as the example, because those are the numbers I can get my hands on. All the amounts are in USD.

CD Baby offers digital distribution to the artists who are selling their product through them. I-Tunes is one of quite a few companies. The others towards the top of the distribution list are Rhapsody and Napster.

CD Baby charges $35 to set up the artist's account, plus one CD that is used by CD Baby for copying tracks, artwork, etc. These are the tracks that are sent out to the dig. distribution companies. CD Baby keeps $4 of every CD sale.
Therefore, for any one CD sold for, let's say, $15, the artist receives $11.

I-Tunes receives the tracks and the artwork, puts it all up on their site for purchase and keeps 30% of what the music costs the purchasing customer.
CD Baby is the intermediary for payment and they keep 9% of what comes to them.
Therefore, for any whole CD sold for $9.99, the artist receives $6.37.

Rhapsody and Napster pay less than I-Tunes. And I-Tunes UK pays more than I-Tunes in the US.

One plus in using dig. distribution for "small" artists is that a worldwide audience who may never hear you or hear of you can find you, listen to you and buy your music. No, it's not the same as buying an entire CD from the artist direct, but it's an audience you would never have had a remote chance of connecting with, otherwise.
A second plus is that, in fact, it's ALL profit. That one album the artist gave away for dig. distribution will be paid for again and again.

The big minus, of course, is that the artist gets roughly 60% of what they would have gotten from CD Baby (just for example) and roughly 40-45% of what they would have gotten from a direct sale.

On the one hand, the artists are making more money.
On the other hand, the artists are losing money to middlemen.

It's for each artist and customer to decide what constitutes a good tradeoff.