Lately, though, the company’s “pick of the week” program has expanded. It started last month with giving away the paid iPhone app Shazam Encore, and this week’s freebie is an extended book sample from Erin Morgenstern’s “The Night Circus.” The expansion could soon extend to TV shows as well, I’m told.

The Starbucks partnership is one of Apple’s oldest iTunes partnerships, and Starbucks has also been beefing up its digital offerings to take advantage of its in-store Wi-Fi.

Short version: A few prominent players have accepted Apple’s terms and will be giving Steve Jobs a big chunk of their subscription revenue.

Many more are sticking around the App Store, but removing any kind of e-commerce link from their apps. This makes their apps less useful, but at least it doesn’t cost them any money.

And a third group is trying an end run by building their own Web apps that will work on Apple devices without requiring the company’s approval.

Some examples from each category:

Play along, eat the tax: Some big print publishers, including the New York Times, Condé Nast and Hearst, are working with the new rules.

That means that they’ll hand over 30 percent of the subscription revenue they generate via iOS apps every month, and that they won’t have access to as much consumer data as they’d get if they sold the subscriptions on their own. But they’ll put up with it in order to reach the 225 million iTunes accounts Apple controls.

(Variation on the theme — play along, pass the tax along to consumers: Music subscription service Rdio is accepting Apple’s tax as well. But to protect its margins it is raising the price for subscriptions sold through iOS devices, from $10 to $15. After Apple gets its 30 percent cut, Rdio will end up with the same $10 it would have had before the new rules.)

Stay in iTunes, but grudgingly: This is the “better than nothing” approach. Services like Netflix, Hulu, Rhapsody, Spotify, and publishers like Time Inc. and The Wall Street Journal (which, like this Web site, is owned by News Corp) are keeping their apps in iTunes. But rather than hand over cash and lose access to customer data, they won’t sell any subscriptions through their iTunes apps.

And at Apple’s insistence, they are stripping out any links that send customers to the companies’ home Web sites. This even applies to services that aren’t selling subscriptions at all, but are offering access to content as part of other subscription services. See, for example, ESPN’s WatchESPN app, which tells users that they have to visit an ESPN Web site to sign up for the service, which is free for certain cable company customers. But the app doesn’t offer a live link to the site, just an address.

End run: The Financial Times was the first big media company to build a Web site that mimics an app but works on Apple’s Safari browser, as a way of working around Apple’s restrictions while reaching Apple’s customers. Now Amazon has followed suit, as has Wal-Mart’s Vudu video service.

Note that both the FT and Amazon continue to keep their old apps in iTunes; they’ve just neutered them. You can still read Kindle titles you bought on Amazon’s iOS app, for instance — you just can’t press a button that will take you directly to Amazon’s Web site to buy a new one.

So what does all of that tell us about the App Store ecosystem and how developers will fare in and out of it?

Not much. It’s pretty early. We might have a better idea in a few months when some publicly traded companies like the Times may end up talking about their Apple relationship during earnings calls. (Admittedly, that’s a stretch of a hope: Apple has a way of getting most of its partners to STFU.)

That said, here’s a not-very-out-on-a-limb prediction: Companies who already have lots of customers and are already in frequent communication with them, like Amazon, should do fine outside of the store.

And companies that have lots of potential customers but little traction, like Vudu, will likely struggle. Particularly since that company sells the same thing — video-on-demand rentals and sales — that Apple already sells through iTunes.

Wal-Mart sold MP3s from its Web site?

Exactly. For the record: The company wasn’t always a complete non-factor in digital music. For a couple years it was a very, very, very, very minor factor.

NPD estimated Wal-Mart’s share of the U.S. digital music market at 1.8 percent at the beginning of 2008. But by the end of last year that number had dropped below one percent, placing it behind Amazon, Zune, Rhapsody and Napster.

And, of course, Apple, which has consistently owned the overwhelming share of the digital music market since the iTunes store launched back in 2003.

It would be easy enough to document Wal-Mart’s missteps — embracing Microsoft’s now-defunct Windows Media Audio standard, for instance — but the truth is that no one has ever made any headway against Apple in this market, ever. Amazon is by the far the best non-Apple performer, and even it hasn’t been able to garner more much than 10 percent of the market.

So cut the world’s biggest physical retailer just a teeny tiny bit of slack.

At least as important: Spotify now has 175,000 paying U.S. subscribers, less than a month after it finally opened its doors in America, says the same source. Last week Billboard cited a source who pegged Spotify’s U.S. user total at “at least one million.”

That’s a conversion rate — crucial to both Spotify’s business plans and to the big music labels — of 12.5 percent. Not quite as good as the 15 percent rate that Spotify reported in its home base of Europe last spring.

On the other hand, Amercian users have less incentive to pay for Spotify than Europeans do — during the company’s six-month launch phase, the U.S. version of the free service gives users more music than the European one does. The main reason to upgrade to paid is to get access on iPhones and Android handsets, for $10 a month.

In any case, it’s still hard to gauge what the numbers mean — it’s very early, and there has been a lot of hype.

Still, for context: Spotify reports that it has 1.6 million paid subscribers in Europe. And last month Rhapsody, the biggest digital music subscription service in the U.S., said it had 800,000 paid subscribers. (Sirius XM has 21 million subscribers, but the satellite radio service isn’t an apples-to-apples analog with Spotify et al; closer to a pear.)

Meanwhile, Rdio, a U.S.-based Spotify competitor hoping to capitalize on Spotify’s wave of publicity — or at least not get drowned by it — has made an interesting move: It is going to continue marketing its service via Apple’s iTunes, while raising its prices — for customers who sign up via its mobile apps — from $10 to $15 a month in order to comply with Apple’s new subscription rules and fees.

Most other subscription services — including Spotify and Rhapsody — have gone the other route, by taking down subscription links from their Apple apps, but keeping their pricing intact.

In this case the check writer is LimeWire, the once-huge file-sharing operation that finally shut down last year under court order. The company handed over $12 million to Warner Music Group last quarter as part of the $105 million settlement it reached with big music labels last spring.

If you argue, as Warner Music and the other labels previously had, that LimeWire was responsible for more than $1 billion worth of damage, then the check won’t mean much. Nor does it mean much to Warner’s operations — the payout amounted to 1.7 percent of the music label’s quarterly revenue.

Still, the big content companies almost never get any satisfaction in the piracy whack-a-mole game. So we’ll go ahead and note this instance now.

While we’re noting things: Warner’s revenue was up 5 percent for the quarter, buoyed in large part by digital sales, which were up 13 percent. The label still posted a net loss of $47 million, though.

My informed guess: Next week. Because that’s what Spotify reps have been telling U.S. label executives.

Or maybe later! Spotify is Spotify, so anyone who has paid any attention to this story will be reflexively skeptical that Spotify will show up in the U.S. until Spotify shows up in the U.S. Meanwhile, Spotify PR reps decline to comment.

While the service has agreements in place with three of the four big music labels, it still doesn’t have a signed deal with Warner Music Group, which normally would be a warning flag for this kind of guesstimating. But people I’ve talked to who are familiar with negotiations believe the two companies are close enough that a deal will be inked before the launch.

Meanwhile, if you’re in the U.S. and want to get a sense of what Spotify will look like, go check out Rdio or MOG or Rhapsody or Napster (for now — that last one may not make it much longer). Each one offers a similar service, where $10 a month gets you unlimited, ad-free, on-demand music on your PC or iPhone or Android handset.

The big difference between Spotify and its competitors is that in the past, Spotify has also offered unlimited free music, with ads, on your PC. But over time Spotify has cut back the amount of free music it offers, and now only gives away 10 hours a month in Europe.

It’s possible that some of those terms will change with the U.S. launch, but I’d expect them to stay quite similar. I also wouldn’t expect a grand PR push when Spotify does open up. Then again, they’re going to get plenty of (even more) free press on launch day.

Lots of people, actually. We’re more than a decade past Napster, and eight years past iTunes, but the majority of the music industry’s revenue still comes from discs.

Even for new stuff! In the same week that Amazon all but gave away digital copies of Lady Gaga’s new album last month, discs made up almost half of her sales.

Amazing!

My hunch is that, increasingly, the people who are buying music in physical form are divided into two groups. There are the people buying it as an afterthought along with gum and other impulse buys stacked near the cash register. And there are the people buying it because they really like stuff — physical, tactile stuff — which might be as important as the music itself.

Here’s stuff for the latter group: Lavish boxed sets from Sony, via its Pop Market Web store. These are collections of ye olde timey music, designed to appeal to generations who remember the world before Netscape and who most likely remember the world before FM radio, too.

Perhaps the kind of people who would drop $99 on an 11-disc Aretha Franklin set. Or $80 on the Byrds. Or maybe even $269 on Miles Davis. (Thanks to Digital Music News for flagging.)

Some of you may be stifling the impulse to titter here. But these things do well for Sony, with good reason: As long as you have an interest in owning and/or playing compact discs, you’re getting good bang for your buck when it comes to the music, at least in raw tonnage.

And if you’re into looking at 5-inch by 5-inch reproductions of old album covers, etc., you’ll be doubly pleased. Nothing wrong with that.

Okey doke. I’m off to hear new stuff at Turntable.fm.

Today, Amazon is trying a do-over. “This time, we’re ready,” the store promises via Twitter.

I bet they will be, but I also bet it won’t matter: Demand for big new albums tends to drop off immediately after they come out, and my hunch is that everyone who had to have “Born This Way” has already got “Born This Way.”

Earlier this week an industry source told The Wall Street Journal that Amazon and Apple’s iTunes had collectively sold between 250,000 and 350,000 copies on Monday.

It’s still important for Amazon to try this again, though. The real point of the promotion was to promote the company’s new cloud music service–anyone who bought the album got an extra 15 gigs of storage in Amazon’s locker for free.

And the fact that Amazon’s servers couldn’t keep up with demand is a sort of anti-promotion. Definitely worth taking a mulligan on this one.

Terms weren’t disclosed, but it’s unlikely Amazon paid much for Amie Street’s store, which tried an innovative variable pricing model that never really broke through.

The company took a long time to get the big music labels onboard, and when it did it was in a limited way. So the store was primarily a place for unknown musicians to try promoting their stuff. It is perhaps most famous as the place you could go to hear the stylings of Ashley Alexandra Dupré, who is best known for work other than music. (Ask Eliot Spitzer.)

So Amie Street has been shifting toward Songza and a Pandora-like radio model for a while, but making that really work requires significant resources for marketing and licensing fees.

So the Amazon (AMZN) deal makes sense for both sides: The start-up team gets to keep working on its own thing, and Amazon gets a relatively cheap customer base to add to its digital-music portfolio, as it tries to figure out how to cut into Apple’s (AAPL) dominance.

Here’s the letter Amie Street sent out to its users this morning:

Amie Street is Moving to Amazon

Dear Amie Street Community,

As of September 22, 2010, all AmieStreet.com pages will be forwarded to Amazon.com and you will no longer be able to use AmieStreet.com or any of its services.

The folks at Amazon have been our advisers since they invested in Amie Street almost four years ago, and as a small thank you for your loyalty and support we’re giving you a $5 promotional code* to spend at the Amazon MP3 store. Simply click here (http://www.amazon.com/mp3credit) and enter this %%code%%. The promotional code must be redeemed by December 1, 2010.

Regarding your Amie Street account, please make sure you download all of your purchased music by September 22, 2010 (the music you have previously downloaded will continue to play normally). If you have credit in your AmieStreet.com account, please make sure you spend your remaining balance before September 22, 2010 as it will not transfer over to Amazon.com.

If you have any questions, concerns or thoughts you’d like to share with us, please don’t hesitate to contact us at feedback@amiestreet.com and one of us will answer you personally.

We believe we’ve found a great home for AmieStreet.com and are committed to making this transition as smooth as possible for you, our fantastic customers.

We want to thank you from the bottom of our hearts for all of your support, help, patience and enthusiasm, and we sincerely hope you’ll continue with us on our journey with the new Songza.com.

Thanks for an incredible four years!

-Elias, Elliott, Eric, Josh and Peter

AmieStreet.com

*Restrictions apply. See www.amazon.com/mp3credit for terms & conditions. Service available only to customers in the United States and is subject to the Amazon MP3 Music Service Terms of Use.

Got that?

I didn’t either, the first few times I read a press release from Warner announcing a new “industry-leading partnership” between the music label and MTV Networks. But in short, Warner is bringing in MTV to sell its digital inventory, replacing an earlier relationship with Outrigger, a boutique sales shop. And while the release has zero mention of Google (GOOG) or YouTube, MTV’s chief job will be to sell ads against Warner’s clips on the giant video site, which accounts for the vast majority of Warner’s video views.

It’s not uncommon for MTV to sell its own stuff on other people’s sites–it has a “Tribes” ad network that does that on properties around the Web. But as far as I can tell, this is the first time that it has sold other people’s inventory, and the first time it has sold ads on YouTube.

Which makes sense, given Google and Viacom’s (VIA) three-year court battle. That fight is going to keep going, by the way, if Viacom makes good on its promise to appeal Google’s summary judgment victory last week.

So how’s that sales relationship going to work? I’ve asked Google and Viacom for comment.

Meanwhile, in the “digital music makes strange bedfellows” category, I’m told that MTV isn’t the only company that Warner approached about repping its stuff on YouTube. Other potential candidates included Hulu, AOL and Vevo.

That last one may raise some eyebrows, given that Warner is the only big music label that isn’t working with Vevo–which is supposed to be the “Hulu for music videos.”

But if MTV can sell ads on YouTube while fighting it in court, I guess anything can happen.

Digital music start-ups seem to come in two flavors these days: Those being sued by the major music labels and those with expensive licensing deals they can’t afford.

But for some reason, plucky Grooveshark, which runs a very nice, free streaming music service, has stayed out of both of those buckets until now. I’ve confirmed that EMI Music Group is suing the site–whose motto is “Play any song in the world, for free!”–for copyright violation.

The label filed suit against Gainesville, Fla.-based Grooveshark in a New York court on May 8. I don’t have a copy of the complaint yet, but if you feel like sharing, hit me at peter@allthingsd.com or use the blind tip box here. No comment from EMI, but Grooveshark sent me a very long statement, which I’ve printed at the bottom of the post.

The takeaway: Grooveshark says it was working on a licensing deal with EMI and now finds itself in court instead. The company does refer to deals with “many artists, labels and publishers,” but as far as I can tell, it doesn’t have deals with any of the other three majors–Warner Music Group (WMG), Universal Music Group, or Sony (SNE)–either.

Grooveshark started out as a peer-to-peer file-sharing start-up in 2006, and has since morphed into a streaming model. When I talked to marketing VP Joshua Bonnain in May, he told me the company was primarily funded by friends and family–most of the company’s employees are either students at or graduates of the University of Florida, he said. But he also said the company had received a “substantial investment from a large party” that he wouldn’t identify.

Bonnain said the site, which generates at least some ad revenue, planned on splitting half of it with the copyright owners of the music it played. But I was never clear about how that was going to work since Grooveshark doesn’t have deals with the majors. Then again, Bonnain didn’t tell me that the company had been sued a few days before we talked, either.

In the music world, negotiations don’t preclude suits and vice versa; Warner was, at one point, suing iMeem, but then became an investor in the site. Same thing with Universal and News Corp.’s (NWS) MySpace. The only real question I’ve had is why the big guys haven’t gone after Grooveshark yet. I’ve been asking label folks about the start-up since November and I’ve only gotten shrugs for an answer.

Anyway, as I said, it’s very nice service, and it would be a shame if the labels can’t figure out a way to work with it or help it survive. But the odds of that happening, based on the unpleasant history of digital music start-ups to date, are very low. So enjoy this themed playlist I created with the site’s help, which features music from all four majors, while you can. Grooveshark’s statement is below.

For the past year, Grooveshark has been in talks with EMI Records and other copyright holders to negotiate licensing agreements for the use of their content. We are pleased to announce that over the past few months Grooveshark successfully concluded mutually bene?cial agreements with many artists, labels, and publishers that we hope to be a template for other such agreements with additional copyright holders.

Recently, EMI Records chose to abandon the template we’ve built with the help of other major copyright holders and opted for their traditional intimidation tactic of ?ling a lawsuit as a negotiating tool. We ?nd the use of this negotiating strategy counterproductive, as Grooveshark has been willing to conclude an agreement with EMI Records that is economically sustainable for both EMI Records and a start-up company the size of Grooveshark.

Grooveshark is run by a group of young and passionate musicians. We love music, we make music, and we believe that the use of all music should be paid for. We adopted this core philosophy at our inception and to date have concluded agreements with hundreds of record labels, major US performance rights organizations, and thousands of independent artists who support Grooveshark’s business model. (See: Grooveshark Artists)

As musicians, we support the rights of copyright holders and strive to sign sustainable agreements with all content owners, ensuring that all artists get paid– or we agree to remove content from our system in accordance with our DMCA Takedown Policy. We hope that EMI Records eventually follows the lead of the many forward-thinking labels we are already working with, who would rather get their artists exposure and a fair share of our revenue than block content access and force customers to illegal networks.

We understand that the economy of the digital music business is in a state of ?ux, and we hope to help ease this transition by providing the required new tools and services that lead to the next generation of the music industry. We respect the ownership rights of the major labels and publishers, and our core mission has always been to compete with piracy by offering a service that is genuinely better than what illegal networks offer, while also ensuring fair payment to copyright holders. Our next important step on our road to success is to conclude a mutually bene?cial agreement with EMI Records that is sustainable for both EMI and Grooveshark.

Warner, which told investors last month that it had written off the $16 million it had invested in the Web music start-up, plus another $4 million in debt, has made a new deal with the company and will get another slug of equity. The big difference: This time, Warner isn’t cutting Imeem a check.

Instead, Warner will get more equity in Imeem in exchange for a renegotiated licensing deal that is supposed to 1) give Imeem a better chance of being able to pay Warner for use of its music and 2) reduce the amount of cash Imeem does pay out to Warner every quarter.

Both companies declined to comment. But multiple sources familiar with the transaction say it was tied to a funding round that Imeem just closed, a follow-up to the emergency money it took on earlier this spring. In total, I’m told, Imeem will have raised an additional $6.5 million this spring. No word on which investors ponied up cash.

But I do know that it wasn’t Warner Music Group (WMG), which already had to tell investors that the $20 million it put into the company previously was worthless. Warner still holds the shares it has written off, but it wasn’t going to pony up any more cash in the recapitalization.

So why make another deal with Imeem at all? The positive spin is that Warner’s earlier write-down was simply an accounting requirement, and that Warner really does like the streaming music company. I’m not sure how much enthusiasm Warner really has for Imeem, but at this point, taking a flier on the company is a no-risk bet: Instead of throwing good money after bad, Warner only has to give it access to its digital music catalog, which doesn’t cost the company a cent, and won’t show up on its books.

Best case scenario: Imeem survives and Warner’s stake is worth something again some day.

And if you want to be optimistic, the really good news here could be for the battered online music business in general, which has struggled to figure a model that works. Up to now, no one except Apple (AAPL) and Amazon (AMZN) has been able to figure out how to make a business out of providing music over the Web–in large part because of the music labels’ insistence on unworkable payment structures.

You could argue that this isn’t the labels’ problem, it’s the start-ups’ problem, and they shouldn’t have gotten into the business in the first place. But now that they’re in it, the labels can try to keep them alive or pull the plug entirely. Looks like they think they’re better off keeping them around.

Earlier this year, the music labels finally got Apple to agree to a tiered pricing plan–69 cents for old songs, 99 cents for most songs, and $1.29 for songs the labels think they can charge more for. And today, Apple (AAPL) introduces a new wrinkle–the “iTunes Pass.”

What’s that? Oddly enough, given Apple’s marketing mastery, the company doesn’t do a bang-up job of explaining it. But here’s the gist: Pay us a premium and we’ll give you a bunch of songs and some other stuff.

The first offering comes from EMI Music Group and Depeche Mode: $18.99 gets you the band’s new album, a bonus track and “great music and video exclusives before and after the album’s release over the next fifteen weeks.” The band starts a big tour in April, so presumably some of the bonus goodies will come from stuff that’s recorded on the road. The deal expires in mid-June, but you’ll be able to keep –permanently–whatever the band puts out until then.

Some of my blog colleagues are describing this as an Apple move toward subscription services, but that doesn’t make any sense. Subscription services give you access to whatever you want, as long as you’re paying a monthly fee (or a variation on that). This is just a fancy version of the old-fashioned upsell: Instead of paying $9.99 for an album, or 99 cents for a single song, Apple and EMI are trying to extract some high-margin extra dollars out of you.

Ever bought a value meal at McDonalds? Same deal.

And there’s nothing wrong with that. If the record labels are going to survive, they’re going to have find ways to get consumers to pay more than a buck a transaction.

Not sure how effective this method will be–even if you’re still a huge Depeche Mode fan, don’t you want to know in advance what you’re getting for your extra money? But doesn’t hurt to try.

Time for the obligatory YouTube clips! Here’s what I believe to be the band’s biggest hit (I’ll confess that I’m not a big DM fan):

And here’s my favorite Depeche Mode cover:

If you view Amazon’s MP3 store as a would-be iTunes-killer, or even a would-be iTunes rival, it has failed miserably. Neither Amazon (AMZN) nor its big label partners–Warner Music Group (WMG), EMI Music Group, Sony (SNE) and Universal Music Group–is publicly releasing any sales numbers. But the best estimates I’ve been able to get from label executives give Amazon 5-to-10 percent of the digital music market, with Apple (AAPL) hanging on to its 70+ percent share.

Billboard reaches the same conclusion, pegging Amazon’s market share at eight percent. Lucas Gonze, a smart digital music guy who spent a brief stint at Yahoo (YHOO) after it acquired his start-up, does some back-of-the-envelope math and concludes that Amazon’s store contributed all of $82 million to the music business, and that Universal collected most of that. That same math means that Amazon grossed all of $39 million from its music store.

And while Amazon’s presence–and the fact that all of its music was sold as MP3s, meaning there were no DRM locks on the songs–was supposed to give the labels more leverage when they negotiated with Apple, we have yet to see Steve Jobs make any significant changes in his contracts.

But the labels would still rather have Amazon in the game. The fact that the world’s biggest e-commerce company is in the music business does have some tangible benefits, like giving players an easy way to get into the music business: Both News Corp.’s (NWS) MySpace and T-Mobile’s new G1/Google (GOOG) phone, for instance, use Amazon to sell downloads. There’s no way Apple would have worked with either platform.

And Amazon can afford to lose money as it figures out its digital media strategy–the company logged nearly $4.3 billion in sales last quarter alone. Right now, it seems content to serve a handful of dedicated MP3 fans/anti-DRM zealots who are actively shunning Apple. But I’m guessing Jeff Bezos and crew have bigger ambitions. So when do we see what those look like?