The latest shock wave to hit the music industry started in guitarist Jonny Greenwood's kitchen on September 30th, when he sat down at his computer and made a quick post to his band's blog: "The new album is finished, and it's coming out in ten days. We've called it In Rainbows."
With that, Radiohead – who became one of the world's biggest unsigned bands when their EMI contract expired in 2003 – launched a new Web site, inrainbows.com, where fans can pay whatever they want to download the album (or buy a lushly packaged "disc box" version with eight extra songs, a vinyl version of the disc and a book for about eighty dollars).
It was an instant success: Enough fans flooded the site that it was inaccessible for hours, and In Rainbows became the talk of the music business. "We're feeling a bit dazed from it all," Greenwood told Rolling Stone on the morning of the album's release. "It's so mad that you can sit in your kitchen and launch this insanity. It's been a sleepless night for everyone in the Radiohead office, but [the album] seems to have gotten everywhere."
Radiohead's fellow artists were quick to weigh in. "I think it's fantastic," says Stone Gossard, guitarist for Pearl Jam, who are also not tied to a label. "I have no problem following Radiohead's lead." Even bands in genres far afield are watching closely: "I love it," says Dixie Chicks singer Natalie Maines. "I'm sure this scares the labels to death. No matter what people give them for it, Radiohead is guaranteed to make more money off their album than they ever did when they were signed."
Combined with the near-simultaneous news that Nine Inch Nails ended their contract with Interscope and that Madonna was leaving Warner for an unconventional deal with Live Nation, Radiohead's move suggested that as the major-label system declines, established artists have a previously unimaginable range of options available to them. "With the current state of the industry, I'd prefer not to be on a label," says Linkin Park singer Chester Bennington.
Radiohead didn't make sales numbers available at press time (and denied reports that they sold 1.2 million copies in the first day), but their management said that most fans paid something for the download. The band, which still intends to release the album as a standard CD, made its move "partly just to get it out quickly, so everyone would hear it at the same time, and partly because it was an experiment that felt worth trying, really," Greenwood says. He adds that the variable pricing came about because "it's fun to make people stop for a few seconds and think about what music is worth."
Greenwood shrugged off fans' complaints about Radiohead's decision to release the album as below-CD-quality 160 kbps MP3s. "We just wanted to make it a bit better than iTunes, so that's kind of good enough, really," he says. "It's never going to be CD quality, because that's what CD does." (In fact, iTunes sells songs at 128 kbps but uses the better-sounding AAC codec.)
Sound quality wasn't the only source of concern. "The freedom it is creating is great for all of us, but it is going to be worse for new bands," says Pearl Jam manager Kelly Curtis. He explains that as labels lose top artists, they will push harder for young acts to sign "360-degree" deals – in which the labels get a chunk of touring, merchandise and other income.
Radiohead-style releases are also a threatening prospect for retailers. "It's kind of a scary scenario that they can go directly to their fans," says Don VanCleave, president of the Coalition of Independent Music Stores, who points out that Radiohead's Web-site crash suggests that bands may not be ready to sell their own music. "I don't know if it left the best fan experience."
Meanwhile, many in the music business say that Radiohead hardly provide a model for the rest of the industry. Their move is only possible for unsigned bands that make enough money touring to risk fans not paying for their music. "It's certainly a big deal," says R.E.M. manager Bertis Downs. "But I can't imagine that many people being able to do it."
This story is from the November 1st, 2007 issue of Rolling Stone.