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Yes, they can be VERY profitable.

I've used cafepress to put a t-shirt into production about 15 minutes after I read about a news story and had profits coming in within the hour (using Google Adwords to drive traffic to the design).

I know of at least one store that made $100,000+ with a timely political design.

It can be time consuming to keep up with it (I stopped), but it can be profitable for sure.
 
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