But here’s a very slight twist: The sales decline slowed in the most recent quarter. U.S. sales dropped 11.1 percent in Q3, compared to a 14.5 percent drop in Q2, according to Nielsen Soundscan.

That’s the good news. The bad news is that Michael Jackson isn’t going to pass away again–and that unless they finally do come to Apple’s (AAPL) iTunes, there probably isn’t another way to repackage the Beatles again. Billboard:

Renewed interest in the Beatles and Michael Jackson slowed the decline of U.S. album sales in the third quarter, although the industry is still on track to fall for the eighth time in nine years….

Music retailers are hoping that the continued performance of Jackson and Beatles albums and a strong fourth-quarter release schedule will continue to make up lost ground.

During the quarter, Jackson’s June 25 death fueled sales of about 5 million units, and the September 9 re-release of the Beatles catalog has sold 1.3 million units so far.

So far this year 11 albums have topped the 1 million-unit mark, the same number as in 2008. In 2008, the top seller was Lil Wayne’s “Tha Carter III,” at 2.5 million units; this year’s top seller is Jackson’s “Number Ones,” at 1.8 million units.

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.

But the lawsuits have yet to be resolved.

Confusing? Of course.

Here’s Project Playlist’s description of the deal, which references layoffs at the company to eliminate redundancies with the new acquisition, but doesn’t specify how many folks are being let go. Given that Total Music only employed about 30 folks at its peak and was essentially shut down last winter, it’s hard to see how many Total Music employees are coming aboard–I’m guessing fewer than a dozen, and am trying to confirm.

We recently acquired assets and employees from TotalMusic LLC, a digital catalog management and reporting system. This acquisition is an important platform that will allow us to host a streaming music service, help us with e-commerce solutions and provide a set of application programming interfaces that will be invaluable to us as we offer next generation digital music services to our users.

Today we are integrating the assets of TotalMusic into our Playlist operation. As a result we have to address some overlap in certain areas and let some employees go both from Playlist and Total Music. This is no reflection on the talent of the people we had to release, rather a responsibility we have to run a lean organization with no redundancies and clear lines of reporting.  This often happens when two companies merge, but it is never easy.

On a positive note, we are very excited about the progress we are making. With the Total Music acquisition and our recent licensing agreements with Sony ATV and EMI Publishing, we are developing new features and services everyday that will form an even deeper bond with our 45 million loyal users and create new revenue opportunities for our company as well as our music content partners. More to come, watch this Space!!

Total Music, which Universal started in the fall of 2007 and shut down this February after joining up with Sony along the way, was supposed to be a subscription music service that got bundled in with devices or with ISPs/cable guys/telcos, etc. Given that it never, to my understanding, streamed a single song or collected a penny in revenue, it’s interesting to see that Project Playlist thinks there’s something there worth buying.

The bigger picture: It’s hard to see how this company can move forward until new CEO John Sykes, who replaced Owen Van Natta when he decamped to run MySpace for News Corp. (NWS), can clear up lawsuits with Universal and Warner and then get Facebook and MySpace to let it back onto their respective sites. The social services were crucial to Playlist since they generated the majority of its visitors, but they cut them off last fall, presumably under pressure from the labels.

Given that Van Natta is now running MySpace and that Playlist was at least able to negotiate an asset purchase from Universal, perhaps there’s a shot at getting all of that accomplished. Then the service could concentrate on the even tougher task of trying to make money in digital music.

This is an embarrassing and ham-fisted cataloging error for a company that prides itself on offering complete selection.

It has been misreported that the issue was limited to Gay & Lesbian themed titles–in fact, it impacted 57,310 books in a number of broad categories such as Health, Mind & Body, Reproductive & Sexual Medicine, and Erotica. This problem impacted books not just in the United States but globally. It affected not just sales rank but also had the effect of removing the books from Amazon’s main product search.

Many books have now been fixed and we’re in the process of fixing the remainder as quickly as possible, and we intend to implement new measures to make this kind of accident less likely to occur in the future.

That isn’t going to mollify Amazon’s most vocal critics in the blog- and Twitter-spheres or the ones who ascribe the screw-up to either homophobia or nefarious hackers. But it’s almost certainly going to be the last word from Amazon (AMZN), which is about as tight-lipped as a publicly-held retailer can be.

Wall Street analysts have to beg Amazon to part with even basic financial details. If you think Jeff Bezos and company are going to get into the workings, and failings, of their online catalog, I admire your optimism.

And then these two sentences: “Discussions regarding the digital distribution of the catalogue will continue. There is no further information available at this time.”

So, to sum up: The Beatles are still not available on Apple’s iTunes (AAPL) or any other legal online venue.

If you want to read about the CDs, which will be released in September and will feature “new packaging,” go right ahead. But if you’re pressed for time, here’s what said packaging will look like. Start saving now:

In theory, the new pricing scheme Apple (AAPL) struck with the big music labels swaps out the old deal–99 cents a song–with three new tiers: 69 cents, 99 cents and $1.29 a song. But based on the (admittedly) cursory check I just conducted, finding a song priced below 99 cents will be very, very rare. In fact, I have yet to find one.

I did find plenty of music priced at $1.29, though. Six of Apple’s Top 10 songs are now at the new tier, which means that if you want buy “Boom Boom Pow” by the Black Eyed Peas (really?), you’re going to have pay up.

That’s pretty much as expected. The labels–that’s Warner Music Group (WMG), EMI Music Group, Sony (SNE) and Vivendi’s Universal Music Group–have always argued that hot new singles should cost more than not-hot new singles, because…. well, actually the logic there that gets a little fuzzy.

But whatever: If the labels can get away with charging more per song, more power to them.

But I don’t understand why they wouldn’t make a point of aggressively discounting some of their older catalog stuff at the same time. Online music sellers have found, via repeated experiments, that consumers are price-sensitive and that if you charge less, they’ll buy more. And last time I checked–and every time I’ve checked for the last decade or so–the labels needed to sell a lot more music, not less. Right?

Wait a minute: Hadn’t big media finally gotten religion and agreed to give us, the demanding consumers, everything we want, whenever we want it? Nope.

Hollywood in particular–which still has a big, if declining, business showing movies in theaters and then in other formats–is still interested in protecting its big analog revenue streams for as long as it can.

Translation: Netflix (NFLX) will show you just a slice of the of the 100,000+ movies it has in its regular catalog on its streaming service, because the studios aren’t eager to cut into their DVD sales and rental businesses. Which are way, way bigger than what they’re getting from digital outlets. And even movies that are available for free rental may disappear after a certain period, because the studios have other revenue “windows” to protect, as CNET explains.

The same thing goes for Apple’s (AAPL) iTunes: Even the mighty Steve Jobs can’t force the studios to give his customers unlimited access to their catalogs. This applies to multiple studios, by the way, and both new and old movies. “The Fifth Element” belongs to Time Warner’s (TWX) Warner Bros. studio, and came out way back in 1997, back when Netscape was a big deal. “Michael Clayton” is a Sony (SNE) movie that came out last year.

And by the way, that George Clooney movie really is good–like the excellent 1970s paranoia films brushed up a bit for modern times. And even more poignant after the past few months. I recommend seeing it even if you have to watch it on a screen other than your laptop. Which is exactly what Sony wants.

The details, from MusicWeek (via Coolfer): You give the company 100 British pounds, and for the next year you can download all the music you want. And because you’re downloading the files in the unencrypted MP3 format, they are yours to keep, and yours to do whatever you want with: Play them on any Apple (AAPL) iPod or iPhone, make copies, burn them to CDs, etc.

Are there catches? Of course: The offer is only available to U.K. residents, who have to use a special USB dongle to make the Datz software work, and it only works on PCs running Microsoft’s (MSFT) Windows, for now. Most crucially, the company only has music from two of the big four music labels–EMI and Warner Music Group (WMG)–and it doesn’t even have all of those companies’ new releases, but a “wide selection of new music released in 2009.”

But play along, for just a minute. Say Datz does end up striking deals with Sony (SNE) and Universal Music Group (and the other big indies), and does end up getting most of the majors’ catalogs. And say Datz is still able to keep the price point about the same: Something in the $15 a month range for unlimited music to own. Could that work, from both a consumer and industry perspective?

Yes. It could.

That’s around the same price point as music subscription services offered by RealNetworks’ (RNWK) Rhapsody and Napster’s (NAPS)/Best Buy’s (BBY) Napster.com. The big difference: Those services only give you access to music, not ownership. And while I’m not hung up on owning music as long as I can get what I want when I want, I’m in the minority on this one.

But if you could hang on to your music–and not have to worry about what format you’re using, since MP3s will work on all formats–then that seems like a compelling offer. The thought of shelling out $162 in advance will likely give people pause, but presumably Datz could figure out a way to extract the payments, à la the mobile carriers, over a one-year period.

Meanwhile, $162 a year is much, much more than most people were ever spending on CDs, even during the format’s boom years. And those, obviously, are long gone. Today the industry would be pleased if the average consumer spent $20 a year on music, no matter what format it’s in.

And yes, we know what many of you are going to say: Why pay for music at all when I can steal whatever I want? Or the faux-sophisticated alternate version: Music should be free! Because it can be replicated for no marginal cost!

Well, can’t argue with that–unless you’re in favor of compensating people who create intellectual property for their work. And I’m one of those old-fashioned types who still thinks that’s a good idea. Hope Datz can pull this off.