Embrace illegal Websites? Andrew Edgecliffe of the Financial Times says music industry ‘should embrace illegal websites’ because huge numbers of people downloaded it illegally even though the band allowed fans to pay little or nothing for it. Remember, purchasing the album on Radiohead’s was not easy which easily skewed the numbers. Economist Will Page says, “Human nature explains a good bit of the lead that Limewire has over iTunes.” “Piracy is popular because it’s popular and its easy to explain why one would choose free goods over expensive goods.”

The fact is Radiohead is one of the biggest bands in the world and to draw a conclusion based on a press stunt is irrational. Why are we talking about this still? Please, read this economic analysis (pdf) of Radiohead ‘In Rainbows’ prepared by Will Page, Chief Economist MCPS-PRS Alliance.

Metallica Releases New Record on Friday: The new Metallica album, “Death Magnetic,” will be released Friday Sept. 12 via Warner Bros. Traditionally, most records are released on Tuesday, but the group’s label claimed Friday was chosen to prevent pirated copies of “St. Anger” from entering the marketplace.

Warner Stock Crumbles: Warner Music fell the most in six months after the financial firm Goldman Sachs lowered third- quarter revenue and profit estimates for the music label and said the company will have a hard time increasing market share. Warner Music dropped 80 cents, or 9.7 percent, to $7.46.

Amazon To Take on iTunes: Amazon has overtaken competitors like Wal-Mart and Rhapsody to become the second biggest online store after iTunes, according to market research firm NPD. Sources tell Fortune that Amazon is in talks with MySpace to become the official download store when it rolls out its joint venture with Universal, Warner Music and SonyBMG in September. Sources say Amazon has a good chance of taking a decent size bit out of Apple’s iTunes.

Sony Takes Control of Bertelsmann: Sony bought Bertelsmann (Elvis, Oasis) in a deal valuing $2.4 billion.