A vague but derogatory term blindly used by music "fans" to describe bands who make (or have managers who make) a new lucrative and/or artistically experimental decision (for example: accepting a product endorsement, a change in the band's expected composition style, switching to a larger record label, dressing with more class, speaking out against mass mp3 piracy, etc.) The word is sometimes also applied to bands who simply get more commercial success through no additional effort.
The anger comes from the false belief that fans "own" their favorite entertainers, that these entertainers are thus not real humans with free will, and the feeling of grief when some CD that the listener previously enjoyed alone is now enjoyed by millions of more people.
(Note that "sellout" ONLY applies to those who make a living in the fine arts. For example, a software engineer who accepts a job promotion and higher salary is never branded as a "sellout". Nor is a professional athlete who appears on a box of Wheaties.)
Actual quotes from an old friend:
(1993) "Damnit, Smashing Pumpkins is such an underrated band. They never get played on the radio!"
(1994) "Damnit, Smashing Pumpkins are always on Mtv and the radio now! They're such sellouts."
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