The New York Times revealed this morning that iTunes sales only account for about twenty two songs per iPod. The rest, presumably, are ripped from the owner's collection of CDs or are obtained from various other--presumably both legal and nefarious--sources.
I'm not sure what the big deal is about this. A $22 accessory sale on top of the original iPod price seems like a nice bonus to me from a financial point of view. And the "analysis" of this trend? "IPods are not sitting around generating dozens and dozens of transactions every quarter. People buy a certain number of songs, and then they stop," the Times quotes analyst Josh Bernoff of Forrester Research.
I think more likely that some iPod people are iTunes buyers and many more are not. There are many legal ways to fill your iPod with content and I'm guessing that purchasing physical CDs and then ripping them is still the way of choice, even in a world of easy intangible purchases.