Still, albums must be sold, revenue must be generated.

Radiohead has so far declined to offer details about how many people have downloaded In Rainbows and how much they have paid. Late last week, however, the British music website Gigwise reported that Radiohead had sold 1.2 million copies of the album in its first week, citing "a source close to the band."

If that number is accurate, it means that the album went platinum in one week—no record label required.

Tim Quirk, vice president for music programming at Rhapsody, a joint venture between media giant Viacom and RealNetworks, said that when artists offer their albums for a suggested donation, the average price paid ends up being remarkably similar to what the record would have cost in a store.

Quirk has seen the music business from every angle. In the 1980s, he was the lead singer of the cult punk band Too Much Joy, which was briefly signed to Warner Music.

Although Too Much Joy had a few videos on MTV, the band never broke through commercially. Still, Quirk and crew earned a devoted following with releases such as 1987's Green Eggs and Crack and 1988's Son of Sam I Am.

Quirk is used to bucking the system. After hip-hop group 2 Live Crew was arrested for indecency, Too Much Joy immediately flew to Florida, and—in protest against censorship—played a show composed of selections from As Nasty as They Wanna Be, earning the band a night in jail on obscenity charges.

“We did it in the same club where they got arrested,” Quirk recalled in an interview. “We tried to get other alt-rock acts to join us (R.E.M., Sonic Youth, etc.), but no one would come. The idea was to see if the cops would arrest white suburban kids for singing the same words, while also protesting some fairly obvious and ridiculous First Amendment violations.”

“There was a three-day trial too, a few months later. The jury took five minutes to find us innocent, and said it would have been quicker, but some of them had to go to the bathroom. The D.A. in Broward County said he wouldn’t prosecute any more obscenity cases after the decision.”

After Too Much Joy broke up in the late 1990s, Quirk joined Listen.com "at the height of the internet boom" as a rock writer and musician-in-residence. In 2003, RealNetworks, which had been developing a streaming digital music service called Rhapsody, bought Listen.com. In August 2007, RealNetworks merged with media giant Viacom, which owns MTV and VH1.

Viacom's purchase of a 49 percent stake in Rhapsody was a major coup for Real, which now gains access to what Quirk described as Viacom's "massive marketing platform" of MTV, VH1, and their other brand outlets. Financial terms of the deal were not disclosed, and Quirk declined to offer details. But filings with the Securities and Exchange Commission show that Viacom will contribute cash and make a five-year commitment of $230 million to the venture, in addition to migrating Urge users to Rhapsody.

As Rhapsody's vice president for music programming, Quirk is the company's chief evangelist for the subscription model. But ever the musician at heart, he also has a side project called Wonderlick with Too Much Joy's guitarist, Jay Blumenfield. Like Radiohead, Quirk and Blumenfield give their music away for free online and simply ask for donations. And it's working.