Amie Street, the music store that features dynamic pricing that varies according to a song’s popularity, has secured a deal with digital music distributor The Orchard, which holds a catalog of over 1 million songs. For the time being not all of The Orchard’s music labels will be taking part in the deal, but Amie Street hopes to have them all finalized in the near future.

Amie Street offers musicians a unique marketplace that scales prices according to how many times a song has been purchased. Fledgling musicians trying to establish an audience will likely see their songs sell for only a few cents, but as they grow more popular song prices increase to up to 98 cents (Amie Street gets the first $5 made by each song, musicians keep 70% of any revenue thereafter). They’ve been one of our favorite startups since launching in mid-2006.

The deal marks a huge win for Amie Street, which has gradually been able to establish itself as a destination to discover new music, especially when compared to more traditional stores like iTunes and Amazon. The Orchard features a long list of notable labels and artists, and while it’s currently unclear how long it will take all of them to sign on, it’s clear that flexible pricing is being accepted as a viable business model by the music industry.

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When you think of prostitutes, you usually think of vice and the dark side of the Valley, and not something most startups would want to be associated it. Independent online music service Amie Street not only loves them, they’re probably praying for more.

In March New York Governor Eliot Spitzer’s predilection for high class call girls was splashed across the media worldwide and his favorite hooker of choice was Ashley Alexandra Dupre. Between tricks Dupre dreamed of a singing career, and her outlet of choice was Amie Street. Dupre’s two singles not only broke Amie Street records for sales volume, she also delivered a massive bounce in traffic for Amie Street. By the end of the month Amie Street’s traffic had more than tripled according to both Quantcast and Compete (charts available on Amie Street’s Crunchbase page here).

There’s no later traffic data to see how much of Amie Street’s new traffic stuck around, the bump certainly didn’t hurt Amie Street’s profile.

See Michael’s January 2007 review of Amie Street here.

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While Eliot Spitzer’s predilection for hookers (sorry, high priced call-girls) has made headlines worldwide, video over Skype may end up as a beneficiary.

Marked as a first for national TV, CNN used Skype Video to conduct a live interview Monday. According to Reuters, CNN interviewed Jeffrey Toobin, who went to Harvard Law School with Spitzer, via Skype from Maui.

The report says that Toobin used a laptop computer and webcam borrowed from the business centre of the hotel where he and his family were staying. The interview was featured in CNN’s prime-time political programming, and Toobin took part in a discussion on Anderson Cooper 360, all via Skype Video.

Skype has long been used for IM and voice calls, but its still relatively new video feature hasn’t taken off in a similar way. With CNN being able to use Skype Video to conduct interviews and live appearances, Skype may now get a boost as a strong video alternative to existing video conferencing tools and companies.

On a related note, the hooker behind the Spitzer scandal sells music on Amie Street. 89c buys the rather ironically named Unspoken Words album with the feature single What We Want.

Update: Amie Street has added a new song “Move ya body” to the playlist. If you want to hear a famous hooker sing get in quick, the album was 29c 12 hours ago, it’s now up to $1.16. Your slice of New York history

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Amie Street is one of my favorite startups right now, partially because they are the embodiment of (what I consider to be) the perfect music model: DRM-free MP3s sold at pure market driven prices.

The company’s business model is dead simple - Artists can upload their music for download on the site. Users download songs, with the starting price at free. When downloads pick up for popular songs, the price starts to rise, all the way up to $0.99. If a song gets to $0.30 or so, you know its popular. The artist keeps 70% of revenues after the first $5 in sales.

We’ve followed the company through its beta and launch periods. Until now, though, the company wasn’t doing much with all the pricing/popularity data they were gathering. Yesterday, however, they started allowing people to vote on songs directly (like Digg and the recently launched iJigg), and launched new areas of the site to show popular songs.

Amie Street has also released tools to help artists promote their songs, including an embeddable player for any song (see this MySpace page for an example) and a tool to allow artists to create Amie Street song stores on their own websites.

The company says they are currently in the process of raising a Series A round of capital. In this funding environment, I don’t think it will be very hard for them to close that round. All three of the founders, Elliott Breece, Elias Roman and Joshua Boltuch (pictured here) are still, I believe, in college.

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