With the rise of downloads, are albums now dead?

It began at this year's Isle of Wight Festival, when Ash's Tim Wheeler announced mid-set: "This is the last song of our final album." Were the Northern Ireland trio set to split?

All was revealed a week later, when the group put out a statement explaining that they would cease to put out albums, yet continue to put out tracks on a regular basis. After the band's star had been on the wane for a couple of years, Ash were back in the news. As the digital revolution takes hold and the music industry comes to terms with falling sales, could the group have made their best career decision yet?

In their statement, Wheeler blamed listening habits for the decline of the long player. "The way people listen to music has changed – with the advent of the download, the emphasis has reverted to single tracks. It hasn't helped that most people have forgotten how to make a decent album. I'm constantly disappointed with records I buy... The future lies elsewhere and we can have a lot of fun by changing things. It's like the Wild West at the moment and a time to take chances and try out new ideas."

Ash's new direction is backed up by changes to the charts that allow any downloaded track to count as a single release. When this revision was introduced in January, Snow Patrol's "Chasing Cars" appeared at No 9 as a download, even though the single had been deleted for several releases, along with Gnarls Barkley's "Crazy" and "Maneater" by Nelly Furtado.

Moreover, Wheeler feels that the single-album-tour cycle grinds too slowly in the digital age. "When you're tied to the album format, you find yourself waiting six months between finishing a record and releasing it. By leaving this behind we can enter a new phase of spontaneity and creativity. We have our own studio in New York, we can record a track and release it the next day if we feel like it, give it to people while it's fresh."

Ash are rightly famed for some incredibly catchy pop-rock hits, from their breakthrough, "Girl from Mars", to the anthemic "Shining Light". They also have two No 1 albums under their belt, though after the sparkling success of Free All Angels, 2004's darker Meltdown was a step back and the forthcoming Twilight of the Innocents is unlikely to fare better, especially after lead single "You Can't Have It All" barely crept into the Top 20. On the message boards of industry news source Record of the Day, Ash's announcement has been treated with a mix of admiration and cynicism.

"Their publishing deal is up. I suspect their record deal may be up after this album too," one poster writes, adding that Ash share management with The Crimea. This is the band dropped by Warner Bros last year, who went on to record an album, Secrets of the Witching Hour, available to download free from their website. At the time, the band said they hoped to tour extensively off the back of the record and have gone on to support Billy Corgan, Modest Mouse and Snow Patrol.

Now that Ash's record contract has come to an end, it was the frustration of waiting to release their final album that inspired Wheeler to take his dramatic course. "We finished the album in January and it was frustrating waiting six months for it to come out, especially since we'd been away for a couple of years. Looking around, we realised how much things had changed and felt it was time to try something new. I remembered the time I was happiest was in 1995 when I was still at school. We kept putting out singles that eventually became our first album, but at the time we could respond to what people were into or give them something different to try."

Wheeler reckons that 80 per cent of iTunes' trade is in single tracks, while labels continue to merge and record shops are in decline. Indie stalwarts such as Cardiff's Spillers are threatened, as are chains such as Tower Records and MVC, though these are only examples of traditional forms of business endangered by the digital age, and don't necessarily mean the album is on the way out.

Indeed, releases this year suggest that 2007 is a vibrant time for music. Before the halfway point of the year, we have already lapped up landmark works from Arcade Fire, Klaxons and Arctic Monkeys, with mouth-watering albums to come from Prince and the Smashing Pumpkins. Sales have stood up well against the digital onslaught, with figures from the Entertainment Retailers Association showing that CDs have stayed steady between 2005 and 2006, though prices have been depressed by competition from online retailers and supermarkets.

This is of little concern to The Go! Team's main man, Ian Parton, looking forward to the release this September of the follow-up to his group's acclaimed 2005 debut, Thunder, Lightning, Strike. He sees the format as being more than a construct based on outdated technology. "Sales shouldn't affect anyone because it's an art form. I'm interested in how tracks are placed on an album, so you take the mood down and when it kicks in again it is that much harder. There will always be people that dig the package, because the artwork creates an emotional tie with the listener."

Nor is the bedroom producer-turned-band-leader bothered about the format's survival in the fast-moving digital world. "It represents what's in your head at one time and snapshots a particular era, so you build up anticipation for a release and people run down to the shops when it comes out." And you hope that will happen with Proof of Youth? Parton chuckles. "Yeah, on a minor scale. There's a curiosity about what we're going to do next." His label, Memphis Industries, has forged links with similar bodies around the world to ensure he has passionate supporters spreading the word, rather than major label minions.

Parton acknowledges that the album is not the force it once was and quotes figures that suggest sales are actually down 20 per cent this year. He is happy to consider labels looking to recoup costs from other sources, whether it is merchandise, tours or licensing music to films and television. This, in fact, is what Sanctuary Records Group has been up to in recent years. It is such a canny arrangement, the organisation recently enticed the back-on-form Happy Mondays to join them for new album Unkle Dysfunktional. Admittedly, Sanctuary itself seems to have put out as many profit warnings as records and may end up being purchased by a larger company, though one suitor, Universal Records, has said it will look to maintain what the industry calls the "360-degree model".

Grant Mitchell, Sanctuary's executive vice president for sales, marketing and digital, believes the industry is still in transition and there is still time to develop an effective business model to support albums. This is the subscriptions-based service, where consumers pay a regular fee for unlimited access to music. Ironically, this was a possibility on the table with Napster before the record labels chose to attack the peer-to-peer service and any high-profile users of such sites.

"We've had an issue with digital rights management, but that can be sorted out if we move from ownership of music to rental. Most people are familiar with paying for a TV licence, then being able to record programmes for friends. This will engender exploration, where people can try out bands they might have heard on the radio, yet still listen to a whole album if they desire."

Subscription has yet to take off, partly through niggles over compatibility between differing services and MP3 players. Mitchell, though, is encouraged by the work of UK company Omnifone, set to launch a service here in October, having already devised Music Station for Sweden. This involves a straightforward download to most people's existing phones, rather than investing in new technology. For £1.99 a week, users enjoy unlimited full-track downloads from a database of 1.2 million songs. "If this becomes the norm, then labels will have greater flexibility to construct deals," he points out.

Otherwise, there is a tendency for record companies to concentrate on packaging, as if deluxe jewel cases are the answer, so that every album released these days seems to be a "special edition" this or "limited" that. Ash's parent company, Warner, promotes the interactive facilities found on its recent chart-topping The Traveling Wilburys Collection, though it has also forged a deal with Lala.com, which specialises in selling albums as downloads. Surely it is better to ensure their charges record material that is worth buying in the first place.

Artists could certainly apply more quality control. The 40th anniversary of Sgt Pepper's Lonely Hearts Club Band reminds us that that classic album weighs in at under 40 minutes, while the eight tracks on The Stooges' Raw Power are miserly by today's standards. Maybe groups could cut down on the filler, especially US hip-hop artists who can put more than 20 tracks on a record, and concentrate more on releasing what is worthwhile. Dance veterans Underworld have put out several download-only recordings, yet are returning with another album in the autumn.

Group founder Karl Hyde says the duo have found empowerment now they can put out music, along with webcasts and live recordings, whenever they want, but admits there is nothing like an album. "I used to hate it when records got re-released and they had loads of bonus tracks – I wanted to hear the artist's original intention. But with the internet, we can put out an album, then people can visit its part of the website and see how we've developed its original ideas."

Digital formats mean that fans don't necessarily have to buy a full album, and nor should artists or labels force them to. Instead, the industry must adapt to a spectrum of consumers' desires and needs. Some fans will want an album to treasure and some acts will make albums worthy of such attention, while others graze for tracks to fill an iPod – usually going for Snow Patrol's "Chasing Cars". That is their loss, but it doesn't necessarily have to be ours.

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