Major music labels often depend on the album sales of their most popular artists to counter the production costs for other musicians they work with. But online, viral views do not always translate into album sales. That’s one of the reasons that EMI and the band OK Go have decided to part ways this week. 

The split opens up new possibilities for OK Go, but leaves open the question. What will labels do when their most popular artists decide to take the middle man out of the distribution equation?

OK Go’s new video for the single This Too Shall Pass has been viewed over 7 million times since its release. Why? Because it’s awesome. The band has learned that impressive attention to detail and single shot live action videos are a pretty consistent way to peak people’s interest online. You can check it out here:

Before their new album was released in January, OK GO was touted by Capitol Records as a huge online success story. But that doesn’t mean that EMI knows what to do with them. In January, the label removed the embed feature for all videos on YouTube created by bands represented by EMI or any of its subsidiaries.

Considering that YouTube has allowed content creators to put overlay ads in its videos embedded on other sites since 2008, that doesn’t make a lot of sense.

And OK GO was not pleased. The band’s lead singer, Damian Kulash wrote in The New York Times:

“[T]he fans and bloggers who helped spread “Here It Goes Again” across
the Internet can no longer do what they did before…Believe it or not, in the four years since our treadmill
dance got such attention, YouTube and EMI have actually made it harder
to share our videos.”

According to Kulash, views of the band’s famous treadmill video dropped 90% after the change —  from about 10,000 a day to just
over 1,000.

The split today was initiated by the band, but mutual. From PaidContent:

“OK Go manager Jamie Kitman announced the separation via e-mail to industry observer Bob Lefsetz
last night: “we secured ok go’s release from capitol—two weeks before
the current video (up to 6.6 million hits in under a week)—came out.
we’re living in the future, about 15 minutes earlier than we’d
expected, and loving it.””

And EMI was happy to let them go, writing:

 ‘We’ve really enjoyed our relationship with OK Go.
They’ve always pushed creative boundaries and have broken new ground,
particularly with their videos. We wish them the greatest success for
the future.’”

According to PaidContent, the band’s new album Of The Blue Colour Of The Sky only sold 3,000 units since January. For a major studio release, that is a huge failure.

But as the dynamics of media consumption change, the pay structure has to change as well. And OK Go is better equipped to handle the changes on its own.

OK Go is creating its own label — Paracadute — to handle all
distribution and promotion issues. And while EMI doesn’t see the benefit of embedding viral videos, the band certainly does.

EMI was leaving money on the floor. Ad dollars on online video views may not compare to album sales for major album releases yet, but there are going to be more and more ways that bands can capitalize on their popularity in new media. The thing EMI should be worried about is what it does when more big name singers and bands decide they don’t need a label making distribution decisions for them when they can release content directly to the public themselves.

In this case, it will be especially interesting to see how many more views this video gets after the announcement today, when bloggers and viewers start sharing the video once again.