The pop band The Presidents of the United States of America
have released a special iPhone app
that contains all of the music from all of their albums, as well as additional rare and unreleased music and images. The whole thing costs $3 -- which certainly blows the old $1/song model out of the water. It's worth noting that one of the band members is now VP of the software company that made the app... and the band actually owns all the rights to its own music -- so that made all of this much easier. Also, it's a bit unclear how the app works exactly, but it certainly looks like the music is locked (hello, DRM!) inside the app. That's annoying.
There have been a few other bands that have experimented with similar "album in an app" type models before, and it's certainly an experiment worth watching. However, by itself, I'm not sure how scalable the model really is. If other bands do this using different apps, then you have to run each one separately and you lose out on the benefit of a central control system for all your music. And, if it really does involve DRM, then bands may just jump on this and alienate fans yet again. Still, if a "standard" and open way of doing this was established, such that bands could have their own apps easily interoperate, and the music wasn't locked down, you could see some interesting models emerge. For example, imagine getting an app that actually kept you updated on a band? Every time they release a new song or add new artwork, it automatically is added to your collection across different devices. That would be a useful application. Unfortunately, this particular app only seems to be a tiny step in that direction (and due to DRM, perhaps a step in the wrong direction).