I'm skeptical of this claim. Registrars pay ICANN something like 7 cents a year per domain and they resell for $10+. That's a nice chunk of change there. Toss in SSL certs for at least that much, you're probably making decent money just on these alone. The hosting and other crap is just more services. I'd say low-end hosting is the loss leader here. Its a commodity industry.
I personally don't use them because I find their advertising extremely distasteful and find the UI to be worse than anything AOL has done in the 1990s.
Where are you getting that information? ICANN fee is $0.18 and then the registrars pay a cost for the domain to the company that oversees the TLD. For example, verisign oversee .com and they charge $7.34 per domain registration, so a registrar pays $0.18 + $7.34 as their base cost per .com registration.
I personally don't use them because I find their advertising extremely distasteful and find the UI to be worse than anything AOL has done in the 1990s.