• Album sales dropped 6% last week and were down 17% versus the same week last year. For the year, album sales are down 14%. Kid Rock's Rock 'N' Roll Jesus debuted at #1 with the modest sum of 172,000 units (zero digital). Sales of digital tracks were flat last week but were up 56% over the same week last year. For the year, digital tracks are up 47%. Soulja Boy Tell'Em's "Crank That (Soulja Boy)" remained the #1 digital track last week even though the album sank 64% last week and fell to #16.

• Jean-Bernard Levy, chief executive of Universal Music Group parent Vivendi, told Reuters UMG will retain its superstar artists. In the wake of the mega-deal between Madonna and Live Nation, Levy predicted artists "feel good" working with UMG and mentioned that UMG is already signing artists to 360-degree contracts. (Reuters)

• Lime Wire will sell DRM-free INgrooves tracks at its upcoming digital store. INgrooves' catalog has about 100,000 tracks. (Press release)

• In an email sent out to its affiliates this morning, Amazon.com said it will pay its affiliates a 20% commission on MP3 sales through the end of 2007, and 10% thereafter. In comparison, iTunes pay affiliates only 5%. That will obviously hurt margins on sales generated by affiliates, as Silicon Valley Insider points out, but what percent of total sales comes from affiliates? Honestly, I have no idea but I can't imagine it being too great. Affiliate programs use a break-even or loss-leader strategy to get incremental revenue and convert that to future business. Don't be concerned about Amazon.com's music margins. This is the price of building awareness and repeat customers. (Silicon Valley Insider)

• Groove Mobile has inked a licensing deal with Redeye Distribution to offer Redeye's catalog -- which includes Yep Roc, Arena Rock and TKO Records -- though Groove Mobile's mobile music service. Groove Mobile powers the Sprint music store in the U.S. and 3UK's mobile music store in the U.K. (Press release)

• Nettwerk Records has joined with Passalong Networks and Digonex Technologies to create a variable-priced MP3 pilot program. Using Digonex's pricing technology, the price of Nettwerk MP3s will be adjusted weekly based on demand. Albums will range from $3.30 to $9.99 while singles will have three price points: $0.33, $0.66 or $0.99. Tracks can be purchased at Passalong's StoreBlocks site. (Press release)