With music sales in decline globally for seven successive years, the industry is engaged in a debate over how best to reverse the trend.
Radiohead said its seventh studio album "In Rainbows" would be available from Radiohead.com from October 10 in MP3 format, meaning it can be played on all digital devices. In the latest twist in the move to digital music, fans can choose how much to pay, or can pay nothing if they prefer.
The band will also offer a special edition boxed set for 40 pounds ($82) which will be available later and will include two vinyl albums, a CD version of the new album and a second CD with additional new songs, artwork and photographs of the band.
Music observers said the British five-piece, which is no longer signed to a record label, is able to sell directly to its fans because it has such an established support base.
"They are the first band to put their money where their mouth is," Gareth Grundy, deputy editor of Q music magazine, told Reuters. "I think other bands that have been similarly successful will look and, if it is deemed to have worked, will do the same."
The traditional music business model has been under pressure as piracy and the move to digital sales has cut into album revenues. A strong area of growth, however, is live music and any subsequent tour by Radiohead would be boosted by the interest generated by the album."The traditional business model had been ruined by the Internet," said Grundy. "The industry is still trying to work out what on earth the new model or models should be and this is just one option."
Radiohead's digital or boxed set versions could be pre-ordered from the group's Web site from Monday and a spokesman said the box set had so far proved the more popular.
The group is planning a traditional CD release of the album in early 2008.
A decision by U.S. music star artist Prince to give his latest album away free with a British newspaper was met with fury by retailers and the industry who said it undermined the value of recorded music.