If I told you that only 3% of online households in the United States have bought music from iTunes in the past year would you believe me? Forrester Research issued a report last week declaring that the 3% of households that have purchased music from iTunes store spent a total of $35 for the year, and half of them spent only $3 or less at a single time. Analyst Josh Bernoff chalks this up to, "even at 99 cents, most consumers still aren't sold on the value of digital music."

So where do the roughly 20% of people who own iPods get their music from? My best guess is through the illegal peer-to-peer networks, which continue to give the music industry its biggest challenge to greater profitability.

This is evident in the deal Universal Music Group CEO Doug Morris struck with Microsoft Corp.'s (NASDAQ:MSFT) Zune wherein Universal receives $1 royalty fee for every Zune device sold by Microsoft. Mr. Morris hinted that he'll seek a similar rate from the iPod when it comes time to renegotiate UMG's iTunes licensing agreement this year.

Apple Computer Inc. (NASDAQ:AAPL) simply needs to find a better way to induce the remaining iPod owners to visit the iTunes Store. Maybe a new pricing scheme, freebie promotions, frequent buyer club with points?

In what I consider to be an "initial barb" at social sites like MySpace, Facebook and YouTube, Vivendi-owned Universal Music Group has filed a suit against MySpace.com. The suit claims that the Web property allows copyrighted material to be posted on user pages within the News Corp.'s (NYSE:NWS) MySpace website.

If you recall, Google, Inc. (NASDAQ:GOOG) even set aside $200 million in its stock last week to prepare for similar copyright infringement cases against its newly acquired YouTube. These lawsuits are sure to come soon as the Internet search giant propels YouTube to the forefront of its online video business. Google might also be considering integrating YouTube with its flagging Google Video, which indeed saw quite a bit of fanfare upon launch (and re-launch), but has fizzled to catch online leader iTunes and other online video websites since.

With MySpace being the first social sharing website to be sued, it will not be the last by any stretch. Universal's suit was filed just hours after MySpace stated that it would offer an enhanced copyright protection tool to make it easier for content owners to remove unauthorized material. What perfect timing Universal had -- although the music company saw MySpace's announcement as perfectly timed to coincide with its lawsuit. Perhaps.

Universal Music claims that MySpace had not only allowed users to upload videos illegally but had also taken part in the infringement by re-formatting the videos for users to play back and to send on to others. Strike one. Let's pay attention to the rest of this game as old media continues to not understand that its business has changed *forever* -- the playing field from 1980 and 1990 is gone for good.