Create a new document "640x480", fill the background with a gradient. Select the "elliptical marquee tool" and draw out a circle, fill with any color.
Then goto "edit > transform > warp", then click the drop down box at the top by "warp:" and select "shell upper".
You will notice your circle has now changed, and you should see an anchor point at the top.
Click the anchor point and drag down, until you get this shape.
Now add these layer styles to the shape.
You should have something like this.
With the "elliptical marquee tool" again draw out another circle over your shape and add these layer styles.
You should have something like this.
Now press "ctrl" and click on your circle layer to select it. Then goto "select > modify > contract" contract the selection by 2 pixels. Now click your weird shapes layer and hit the delete key, you should be left with this. You will only see a slight change, but if you move your blue orb you will notice there is now a hole in your weird shape.
Select the "elliptical marquee tool" again and draw out a circle like the image below.
Set the opacity to about 30% also add a layer mask to blend it in.
Do the same as above again but make the circle smaller and set opacity to 20%.
Now this album cover is going to be for a dance album, so I've searched google for a nice vector image and pasted it on my orb under my little white reflections layer that we made just. I've also added an outer glow
Duplicate your image and flip it vertically, add a layer mask to it to make a nice reflection.
If you don't no how to do reflections i suggest you try my reflections tutorial.
Its coming along nicely, lets add some text, select the type tool and add your album title and album artist. (see image below) I've added a gradient overlay and a 2 pixel stroke to my text.
That's it!, Although you could take it one step further and make it your own by adding your own sort of style. Here's my finished version just to give you some ideas.
More Tutorials: 
