Last.FM site update brought many new features in the way of representing members libraries and artists official images.
Site redesign as of July 2008. standardized default artists image size at their profiles. So, new default size for artist is 252px width and 378px height. But, if you upload images bigger that 252 x 378 site will automatically cropped them off the bottom to fit them for proper view. That being said, the image on the artist's page will always be 252px width and its height will depend of its ratio. If image's ratio is standardized as default, which is 1:1.5 (252x378), the image will be cropped in that manner.
All images uploaded in new, default size (252x378), it will stay untouched by last.fm image resizing algorithms. This is especially good for images that aren't in PNG file format (JPGs).
Everything written above stipulated one main principle - always upload images bigger than 252 (width) x 378 (height) pixels.
Special lines in this entry deserves artist's images library view. Images for library are cropped in next manner: They are always resized to the width of 126 pixels and their height will always be 100 pixels only from the top. What that means? There is artist Ólafur Arnalds which image is good example of bad image cropping (before uploading):
Image in his gallery (always resized to 500px width):

Image on his profile (always resized to 252px width):

And now, this is the main problem, this is image in our libraries:
How this happens? Image is first resized to 126 px width, so it will look like this:

And after that, this is what happens (Adobe Photoshop screenshot):
The image/photo will always be cropped 100px from the top. And that is the only area that will be visible in our libraries.
There is one example I'll show. Temporarily, default image of Philip Glass is my upload Vs. image uploaded by user Schorschi:


Now this is how mine image looks in library Vs. his image:
That is the fact one must considers before uploading any image. Always keep the "happening" in the photo, or artist head, or bands members in that "upper" area of photo. If photo doesn't meet that requirements, like the one mentioned, never/ever upload it in gallery.
File Format differences, advantageous & final decision
There is that eternal debate - JPG or PNG. I will copy/paste part of the text (and bold the text important for our discussion) from Wikipedia about this subject:
JPEG (Joint Photography Experts Group) can produce a smaller file than PNG for photographic (and photo-like) images, since JPEG uses a lossy encoding method specifically designed for photographic image data, which is typically dominated by soft, low-contrast transitions, and an amount of noise or similar irregular structures. Using PNG instead of a high-quality JPEG for such images would result in a large increase in filesize (often 5–10 times) with negligible gain in quality. PNG is a better choice than JPEG for storing images that contain text, line art, or other images with sharp transitions. Where an image contains both sharp transitions and photographic parts a choice must be made between the large but sharp PNG and a small JPEG with artifacts around sharp transitions. JPEG also does not support transparency. JPEG is a worse choice for storing images that require further editing as it suffers from generation loss, whereas lossless formats do not. Since PNGs extreme inefficiency in (non-)compressing photographs makes it not useful for saving temporary photographs that require successive editing, the usual choice is a loss-less compression format designed for photographic images, such as lossless JPEG 2000, or Adobe DNG (Digital negative). When the photograph is ready to be distributed, it can then be saved as a JPEG, and this limits the information loss to just one generation. Furthermore, PNG does not provide a standard means of embedding Exif image data from sources such as digital cameras, which makes it problematic for use amongst photographers, especially professionals. TIFF, JPEG 2000, and DNG do support such meta data. JPEG has historically been the format of choice for exporting images containing gradients, as it could handle the color depth much better than the GIF format. However, any compression by the JPEG would cause the gradient to become blurry, but a 24-bit PNG export of a gradient image often comes out identical to the source image, and at a small file size. As such, the PNG format is the optimal choice for exporting small, repeating gradients for web usage.
With this acknowledgement, our debate gave no other choice except PNG file format.
Here are some visual differences between PNG and JPG file formats for the same image:




On the left is PNG, while on the right is JPG. Image comparing done using Clare Teal's gallery.
There is one fact that must be taken properly when we are talking about group/band images. Keep 'em as square as possible. Landscape based images for bands aren't cropped properly in libraries.
Example:
The Cure
Image uploaded by HPH:

One member is "missing" by cropping algorithm of Last.FM.
Image uploaded by me:

Always strive for a finding band images which are similar in composition to the one I uploaded in The Cure gallery.
If you have any suggestions, you are more than welcome to share.









































































