Buyers can pay zero or whatever they please up to £99.99 (about $212) for the album in MP3 form.

After fulfilling its contract in 2003 with its last album for EMI, “Hail to the Thief,” Radiohead turned down multimillion-dollar offers for a new major-label deal, preferring to stay independent.

The Eagles and Madonna, both with sales that dwarf Radiohead’s, also abandoned major labels in 2007, as did songwriters as influential as Joni Mitchell and Paul McCartney, who moved to Hear Music, the independent label partly owned by Starbucks.

The band and its managers are not releasing the download’s sales figures or average price, and may never do so. “It’s our linen,” Mr. Hufford said. “We don’t want to wash it in public.” A statement from the band rejected estimates by the online survey company ComScore that during October about three-fifths of worldwide downloaders took the album free, while the rest paid an average of $6. Factoring in free downloads, ComScore said the average price per download was $2.26.

Under a typical recording contract, a band receives royalties of about 15 percent of an album’s wholesale price after expenses are recovered. Without middlemen, and with zero material costs for a download, $2.26 per album would work out to Radiohead’s advantage — not to mention the worldwide publicity.

Radiohead has not abandoned the physical disc. A mail-order deluxe version of “In Rainbows” — the album and a bonus CD, two vinyl albums, artwork and a fancy package for $80 — went on sale alongside the downloaded version on Oct. 10. The music business awaits results on how the worldwide downloads of “In Rainbows” will affect disc sales.

said by TKJunkMail :

This type of business model may work for well known stars well in to their careers. It has yet to vault an unknown in to star status. The major label system still has a lock on that, with their massive publicity and advertising budgets.

said by TwKs :

You've never heard of Colbie Caillat, I take it? She started on Myspace as an unknown, posted her music, became number one on the charts without a record deal. She sells her music directly, not sure if she's signed yet or not, but I don't believe she is. ( I could be wrong. ) Record companies are becoming obsolete.

*edit*she is recently signed to a record label.
»colbiecaillatmusic.com/

said by TwKs :

You've never heard of Colbie Caillat, I take it? She started on Myspace as an unknown, posted her music, became number one on the charts without a record deal. She sells her music directly, not sure if she's signed yet or not, but I don't believe she is. ( I could be wrong. ) Record companies are becoming obsolete.

*edit*she is recently signed to a record label.
»colbiecaillatmusic.com/