The mini music player by Apple (NASDAQ:AAPL) -- the iPod -- is a nifty little device, primarily allowing you to listen to downloaded music but also giving you the opportunity to take notes orally, view pictures (on the newest versions), record appointments on a calendar, and play a couple of built-in games while waiting to get your teeth drilled at the dentist.

The iPod has lately been subject to the Rumor of the Week. There are rumblings that a new flash-based player will be introduced at around $200. To be unveiled in January, it will help the company maintain, if not grow, its commanding dominance of the market. Apple currently owns 92% of the digital music players with a hard drive but only 65% of the market if you include flash-based players.

There's also the rumor of a wireless iPod that can be used to transmit music to other media systems. Based upon some patent application filed in early 2003, the user would select the media device from a list on the iPod and then direct music or other information to the component or even to other people. It may not be unveiled anytime soon, but Apple has apparently been working on it for some two years now.

Gaming is the latest rumor to have attracted attention. Currently you can play Solitaire, Brick, Parachute, and Music Quiz, but the chance to download games to the iPod hasn't been considered -- until now. Rumors swept the market last week that Digital River (NASDAQ:DRIV), an e-commerce outsource provider, was negotiating to allow games to be brought to the media player. So powerful were the rumors that they sent Digital River's stock soaring 10% on the day, as it has been developing its technology to allow for the download of any content, games or otherwise, to any device.

It would certainly be a challenge to other game handhelds if Apple entered the fray. Rumors already abound that Digital River could cement a deal by February with leading game makers such as Electronic Arts (NASDAQ:ERTS) or Activision (NASDAQ:ATVI) to begin selling their games through online downloads. It is viewed as the next advance in having games reach increasingly greater numbers of people.

The types of games that would be available would initially be limited because of the size of the iPod's memory. But as memory size begins to expand -- it could rise to as large as 1 gigabyte if the flash iPod rumor proves true -- more complex or advanced games could certainly become part of the library.

Neither Apple nor Digital River has commented on the speculation, and some analysts question the veracity of the rumor, since Apple's iTunes has been at the forefront of the mill and the company has been able to handle the transactions for music itself thus far.

Still, Apple could soon be floating on a digital river of music, pictures, and games, positioning itself as a formidable threat and adding to its market dominance.

Fool contributor Rich Duprey is a formidable threat to a six-pack of Coors Light. He owns shares in Digital River but does not own any of the other stocks mentioned in this article.