No she's not in jail. Her record label is literally giving away all its records online for free. I was listening to a hard-copy of Jenny Lewis' smashing Rabbit Fur Coat just this morning. I paid about thirteen bucks for it, but you can have it all for free, except for the Travelling Wilburys' "Handle With Care" (which the label doesn't have the rights to distribute for copyright reasons -- not a huge loss, though it's a better song than you remember).
Very interesting marketing strategy.