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Which of the two is more profitable?

It's simpler to make money with your own product, for which you can
set up JV, invent special offers, test and tweak the sales copy, rely
on other people to promote it for a commission, etc...
You have total control over your product so you have more tools to
make money than what you have with something over which you have
very little control (i.e. other people's products and websites)

But owning your own product also means that you have a big load of
extra work, in the form of providing support, updating the product,
keeping track of many more things, caring about security and other
issues like false spam complaints that could shut your business
down for some time (which means lost profits) etc etc.

On the contrary, affiliate programs allow you to have a much higher
degree of freedom: you don't owe support to anyone, if the website
goes down you can promote other stuff and keep the profits rolling
in, you don't have to worry about hackers and customer care etc...

When you sell your own product you have to provide a minimal level
of support and customer care, which in turn could generate more
sales (any sale after the first one is much easier, especially with
happy customers :) so there is more work and also potentially
more profits - if you work well enough.

If you're not organised well enough to guarantee proper support and
timely email replies, it will probably be easier to promote somebody
else's product.

So, which of the two is more profitable?
If you are faster at generating new affiliate sales than what you
would be at providing support for your customers, affiliate marketing
is the choice.

If instead you enjoy providing support, you could make more profits
with your own product (especially with the support of a good affiliate
team that brings in the orders for you to take care of ;)

So, how "lazy" are you? If you prefer "automatic cash machines", the best
choice is the promote otehr people's products. If you don't mind working
for your customers to provide excellent service and you're good at it, you
could make more money with your own product - or even better - your own
series of products (Armand Morin style: that's how you make lots
of money with your list of customers: you sell them lots of things! ;)

Brief recap: when you're an affiliate you're sending business to someone
else who - if s/he's good enough - will take advantage of the lifetime
value of the customer. When you're the owner, you work more but if you're
good at it you can also make more money: here's a short numerical example.

The Product costs $100.
An affiliate will make $50 for each customer they send to the owner.
The owner will make $50 + anything else s/he manages to sell to the customer
in the following months and years (if s/he's good enough at providing the care
and support that happy customers want to stay happy ;)

Here is why you have to be very well organised or at least why, if you own
your product, you MUST have affiliates promoting it:

More sales = more work for customer support
More work = less time to promote
Less time to promote = less sales

If you have a cool team of power affiliates instead you don't need to
promote, since *they* will be selling for you, but you do need to
provide them with tools and *support* (again) to help them help you ;)

cheers,
Saul