“Music, software, and apps are the most popular content that internet users have paid to access or download, although the range of paid online content is quite varied and widespread,” Pew reports. Pornography was another category which yielded large number of downloads.

Music and software had 33% each of the paid download market. Apps were next with 21%. The popularity of the Apple (NASDAQ: AAPL) App Store probably accounted for a great deal of those application downloads. Games were next at 19% which shows how much of a challenge traditional video game and console makers face.

The problem with the trends in the survey, from the standpoint of companies that make paid download content, is that only half  (46%) of internet users downloaded one of two applications. Heavy users of paid content, those who downloaded six or more applications or content files, were only 16% of the universe.

Younger adults were more likely to buy content than people over 49 years of age. That supports other research that shows Americans past mid-life use the internet in a much more limited way than younger people do.

The Pew data is not as illuminating as creators of paid downloads might like it to be. The research shows that the number of people who are very active in paying for downloads is limited. Among those people, it is likely that their downloads are limited by discretionary income. People online also usually have a small set of interests. It would be rare to find someone who pays for dozens of categories of content. Most people’s tastes are less broad than that.

The prevalence of music downloads tells a great deal about the nearly universal appeal of the iTune store. Apple also drives app downloads to iPhones, iPods, and iPads. That means a single company is likely to account for a significant share of paid content activity online. People will only pay for so much music and so many applications for smartphones and tablet PCs. The paid content business online is still limited to a small population which cannot carry the load of what content providers hope is an expanding market.

Methodology: The PSRAI October 2010 Omnibus Week 4 obtained telephone interviews with a nationally representative sample of 1,003 adults living in the continental United States

Douglas A. McIntyre

Global M&A moved above $2.2 trillion in 2010. (Reuters)

Moody’s cut Ireland to Baa1. (Reuters)

NSA’s Information Assurance Directorate, which protects US data, assumes that any data base can be hacked (Reuters)

Apple (NASDAQ: AAPL) may have unusually strong holiday sales (Reuters)

Level 3 (NASDAQ: LVLT), a competitor to cable companies, said it wants restrictions on the NBCU/Comcast deal. (Reuters)

Xe Services, formerly Blackwater, will be sold to new investors. (NYT)

The EU put together plans for a new bailout fund, but it did not calm markets. (WSJ)

The Administration said Americans should have a “privacy Bill of Rights” to protect online data. (WSJ)

A rebound in tech spending sent Oracle (NASDAQ: ORCL) shares higher. (WSJ)

Profits at Research In Motion (NASDAQ: RIMM) rose sharply. (WSJ)

Roche says its drug Avastin will be restricted for breast cancer use. (WSJ)

Hewlett-Packard (NYSE: HPQ) said a bribery charge against it has gotten bigger. (WSJ)

General Mills will raise prices on more products. (WSJ)

Amazon’s (NASDAQ: AMZN) online music store appears not to have hurt Apple (NASDAQ: AAPL) iTunes. (WSJ)

The Senate failed to act on a $1.1 increase in government spending. (WSJ)

National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling said sand meant to block oil from the shore of the Gulf did not work. (WSJ)

The Agriculture Department may restrict the use of biocrops. (WSJ)

China and India plan to sharply increase trade between them. (WSJ)

Some analysts still expect a break-up of the eurozone. (WSJ)

The European Central bank said it will increase its subscribed capital to $14.23 billion. (WSJ)

Oracle profits rose 28%. (WSJ)

Consumer Reports says Sprint-Nextel’s (NASDAQ: S) customer satisfaction rating rose. (WSJ)

Google (NASDAQ: GOOG) set an arrangement to continue to sell ads on News Corp’s (NYSE: NWS) MySpace. (WSJ)

Increases in Treasury yields pushed mortgage rates higher. (WSJ)

The Bank for International Settlements said banks will face a $763 billion capital shortfall under Basel III regulations. (WSJ)

Nokia (NYSE: NOK) sued Apple for more patent infringements. (NYT)

Obama will try to get private capital back into the mortgage markets. (FT)

US court decisions could sharply increase costs of the BP plc (NYSE: BP) oil spill. (FT)

Spain’s banks may have sharp drops in revenue. (Bloomberg)

The lapse of incentives in the Chinese car market could help GM. (NYSE: GM) (Bloomberg)

Massey may takeover International Coal. (Bloomberg)

Douglas A. McIntyre

Reuters:   Saudi investors are seeking a 10% to 15% stake in BP.

Reuters:   Microsoft Corporation (NASDAQ: MSFT) will cut a small number of jobs.

Reuters:   Borders launched an e-book store.

Reuters:   Sony (NYSE: SNE) cut its e-reader price to better compete with the Amazon.com (NASDAQ: AMZN) Kindle and Barnes & Noble (NYSE: BKS) NookReuters:   Google Inc.’s (NASDAQ: GOOG) China website is being reviewed by the government.

Reuters:   China’s AgBank priced to be the largest IPO in history.

Reuters:   ICBC, one of China’s largest banks, may raise more money.

Reuters:   KKR will probably launch its IPO in mid-July.

WSJ:   Job benefits may cause the jobless to “pickier” in the job searches.

WSJ:   Steel production in falling, a sign that the economy is slowing.

WSJ:   Apple Inc (NASDAQ: AAPL ) said an app developer fraudulently set up several hundred iTunes accounts.

WSJ:   Japanese companies are redesigning products for emerging markets.

WSJ:   Google has increased its efforts to get more marketshare for its Chrome browser.

WSJ:   BP plc said it will not issue new equity.

WSJ:   VW added to its stake in Porsche.

WSJ:   The Obama home energy efficiency program may cause problems for real estate investors.

WSJ:   The UK is cutting its budget while the US is considering increasing its spending plan.

WSJ:   The EU said Monsanto cannot stop Argentine farmers who export seed with the company’s patented formula to Europe.

WSJ:   AT Kearny and Booz called off merger talks.

WSJ:   European governments are selling more property to bring in money.

NYT;   India is expanding its role as a drugmaker.

NYT:   UK inflation could hurt that nation’s recovery.

FT:   The Walt Disney Company (NYSE: DIS) will expand its language schools in China.

FT:   The earnings for global investment banks will drop sharply.

Bloomberg:   Samsung posted a record profit on chip sales.

Bloomberg:   China will put a resource tax on oil, gas, and coal on western sections of the country.

Bloomberg:   Microsoft Xbox sales probably broke $1 billion in the company’s last fiscal year.

Douglas A. McIntyre

The New York Times reports that “investigators were probing whether Apple has tried to persuade music labels to not give rival Amazon.com Inc. exclusive access to soon-to-be released music.”

The music industry may want to be careful what it asks for in the event that its complaints are successful.The Apple iTunes store passed 10 billion downloads in February. The company accounts for 70% of digital music downloads worldwide.

Several publishers have resisted Apple’s pricing. But, without Apple most of these companies would lose a larger part of their sales. The music industry is already in deep trouble due to falling sales of CDs.  Even though iTunes pricing may be less than they would like and their cut of sales is below what they have asked for, Apple is the company that keeps their revenues at levels that allow them to survive.

Apple performs another service to the music industry. Piracy takes as much as 80% of the potential digital revenue from the music firms. While Apple does not use electronic systems to prevent the sharing of music and the iTunes store sells songs and albums that are later stolen, it is still the largest provider of un-pirated music and premier video content in the world.

The music business can work to curtail the dominance of iTunes, or it can accept less of what it wants as a portion of Apple’s take. But without Apple, there would be almost no take at all. No other company has 300 million iPods and 50 million iPhones in the market.

Douglas A. McIntyre

Apple’s market value has reached $218 billion and is rising. Due to investor appreciation of Apple’s innovation, rapidly rising revenue and net income, and powerful brand, the price of the firm’s stock is up 110% over the last year.

Apple’s market cap ranks No.3 among stocks traded on US exchanges. It trails only Microsoft (MSFT) at $257 billion and Exxon Mobil (XOM) at $322 billion. Several analysts recently increased their price targets for Apple to more than $300. Apple trades at an all-time high of over $238 a share. If the stock does rise by 26% to $300, the firm’s market cap would be $272  billion. Microsoft’s stock could gain 5% and Apple would still take the No.2 spot in market value.

The case for Apple passing Microsoft is not much of a stretch. Apple’s older products, the Mac and iPod, would have to hold their own in their respective markets. The Mac’s share of the US computer market is about 7%.  Its sales are rising fast enough that it should be able to keep that position. The iPod really has no direct competition and iTunes has such a large share of the online music market that its broad library of content will help the iPod keep its spot among multimedia players.

The iPhone will have to continue to have blistering sales for Apple to continue to do extremely well. The handset is now a third of Apple’s revenue. Most analysts expect over 7 million iPhones to be sold in the current corner and that is without the handset having a strong foothold in large markets such as China. The biggest threat to the iPhone’s success seems to be the emergence of Google (GOOG) Android-powered handsets which have grown rapidly and seem to be taking market share from established operations like RIM (RIMM). Apple will have to show Wall St. that Android is not a significant threat to its smartphone business. Jobs & Co. expect to launch a new version of the iPhone this summer, which should help sales.

The wild card in Apple’s growth is the new iPad. Investors expect it to be a success. Analyst estimates of its sales in the first year after its launch are for five million to ten million units to be shipped. Any number well short of that will cause Wall St. to believe that Apple has lost its amazing touch with consumers. That would almost certainly stop the firm’s stock from advancing.

Apple will announce earnings in about a month. Revenue is expected to above $8 billion. Investors will expect the company to top its own EPS forecasts, which it almost always does. An upside surprise on earnings will almost certainly send Apple’s shares higher.

Apple’s market cap could pass Microsoft’s by the middle of the year.

Douglas A. McIntyre

Among the public companies in the handset business which trade on US exchanges, Nokia  (NOK) has performed the most poorly over the last year. The firm’s shares are up a little over 30% while the DJIA is higher by 50%. Apple (AAPL), RIM (RIMM), and Motorola (MOT) have performed much better over the period. Until a month ago, so had failed smartphone company Palm (PALM).

Nokia’s performance is particularly disappointing since it is the largest handset company in the world with a market share of 38%.

Nokia could have had an insurmountable lead in both the smartphone and mobile operating systems sectors. It let RIM take a commanding position at the top of the enterprise handset industry and let Apple move into the upper tier of consumer smartphones. More recently, Google (GOOG) has captured a breathtakingly large part of the wireless operating system business with its Android product which is still adding new handset customers.

Apple now controls the wireless software application download business and its iTunes store is likely to hold its position as the primary conduit of mobile broadband content distribution.

Nokia did not take advantage of any of the opportunities that it had by being in first place. It failed to leverage its partnerships with carriers, manufacturers, software developers, and content companies. And, at this point, it is not likely to catch its smaller competitors in the most profitable and strategically important parts of the industry.

Douglas A. McIntyre

We’ve already gotten the iPhone, we’ve already seen new PC announcements, we’ve already been given the delayed launch date of the Leopard operating system, and we are still viewing the TV initiative as a hobby as Steve Jobs called it himself.  Unless Apple is going to shock the you know what out of everyone with a new unknown and undiscovered product, this iPod revamp makes more than perfect sense.  Consumers want it too.

Back in April, Apple said it had sold its 100-millionth iPod.  This goal is probably to hit 200 million units if it wants to keep driving the stock.  We think this may be more of an iPhone-esque iPod, but without the phone.  So we’d be looking for more touch screen and hopefully some more Wi-Fi features.  We’ll know in a few hours.  Here is what some of our tech friends are saying around the web today:

Business 2.0: wide-screen, touch-sensitive iPod, iPod nano with a larger screen, iPod Shuffle with more memory for the same price….

Engadget: Rick Rubin proclaims "the iPod will be obsolete"
Apple to unleash "The Circle" concept tomorrow?

Newsday.com: What’s coming next from Apple?

CNET: "The iPod is growing up: If Apple really is putting a version of Mac OS X in a new iPod, presumably it has more in mind than showing high-quality reruns of The Hills."

Think Secret: Touch-screen iPod to take center stage

San Francisco Chronicle: What news awaits the Apple faithful?
Speculation centers on redesigned iPods, expanded content offerings on iTunes

After the recent Zune price cuts, you have to wonder if Microsoft (NASDAQ:MSFT) is holding on to this space with looser hands and maybe just as a hobby.  And as far as Creative Tech (NASDAQ:CREAF), everyone now only asks "Who?".

Jon C. Ogg
September 5, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Wal-Mart is one of the first major retailers to offer MP3 digital tracks with music content from major record labels such as Universal and EMI Music, and the launch is aimed to get into the space of Apple (NASDAQ:AAPL) and Amazon.com (NASSDAQ:AMZN).  Wal-Mart’s new MP3 music catalog includes hundreds of thousands of songs and albums, and will be continually expanded with additional mainstream and independent music content. Also, Wal-Mart is currently offering special MP3 album pricing on hundreds of album classics.

It used to be that once Wal-Mart went after your space that things became instantly worse for you and your other competitors.  But after the Wal-Mart woes of late, they just don’t seem able to wrangle away customers at the same rate.  In fact, many may now chuckle at new initiatives because its online presence is still too small to be a major factor.

Steve Jobs and Jeff Bezos probably didn’t call each other up in a panic this morning, and probably won’t be tomorrow either.  These stocks are even higher on the heels of RealNetworks (NASDAQ:RNWK) launch of a new digital music company with MTV.  We addressed this earlier today.  If these were as threatening as they sound then Amazon.com (AMZN) shares might not be up 3.8% and Apple (AAPL) shares might not be up 4% today.  Getting the huge established tech predators unseated from a dinner table at their favorite restaurants usually takes more than getting a two-top table in the corner.

Jon C. Ogg
August 21, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Now what is interesting here is that Napster has been deemed not quite on life support or in limbo, but the financial situation is a peculiar one.  The company is expected to post wide losses for fiscal March-2008 and for fiscal March-2009.  The revenues for each year respectively are $140.6 million and $165 million.

As of last quarter the company has $66.4 million in cash and equivalents.  The good news is that its entire liabilities were only $37 million but the company has been bleeding out over $7 million  (last quarter) and over $9 million in each of the two prior quarters.  Its total cash flow from operations was over $3 million last quarter. 

Here is the good news, at the current rate the company can sustain itself for several years without hitting the cash trough.  The bad news is that if it loses any key relationships then it has some serious decisions to make.  There has not been a peep from the 2006 hopes of any merger, and the company has not really been able to capitalize on being potentially the top iTunes competitor out there. 

With the contract agreements already in place there has to be some value to the online music database, but the question is more "what is that price?" than a current answer has shown.  The company has a $128 million market cap, and with shares at $2.76 it is closer to the bottom of its $2.55 to $4.92 trading range over the last 52-weeks.

Jon C. Ogg
August 1, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

The ripping of CDs pulls untold millions of dollars from potential legitimate sales. And, shareholders in music publishers are paying for it. Warner Music Group’s (WMG) stock is down 50% in the last year.

So, it should not be terribly surprising that the publishers want more money, a bigger cut, from what is likely to be their largest sales outlet within the next year, iTunes. Apple is likely to object to the idea, but the music guys are running out of options. Animals can be dangerous when cornered.

According to The New York Times, Universal Music, a unit of Vivendi, the largest music publisher in the world, had decided not to renew its deal with iTunes for another year. Instead, it will offer music to Apple as long as it likes the terms. By going that route, Universal could put individual titles at will.

Universal’s music accounts for one out of every three albums sold in the US, according to Nielsen. Universal could hurt iTunes, But, perhaps iTunes could hurt Universal more by refusing to carry its titles at all. That would probably lead to protracted anti-trust litigation, the kind that has haunted Microsoft (MSFT) for years.

But, in the short term the question will be whether other large publisher like Warner would join a revolt and whether the artists represented by the large music companies will have a problem with having their music pulled from the iTunes platform.

Artists may be finding another way to market their music, and that could work against Apple. Music company EMI and tech firm Snocap have set up a system so that artists can sell their records in an MP3 format, which would work on a number of devices including the iPod. The techology would allow them to sell their songs directly from their own websites or from social network sites.

Up to now, Apple has been able to hold the music companies in line. That may be ending.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com