Wilco returns.

ecord sales are way down. Radio listeners are dwindling. If you believe the questionable claims of the Recording Industry Association of America, which enlists pity as a pointless weapon against would-be MP3 pirates and bootleggers, the music industry is in the midst of a dire recession unlike any it has seen in more than two decades.

Given the economic environment, you’d think record companies might be more inclined to take a few risks: If the old way seems to be failing, then perhaps the answer lies in a new way. Yet the major labels in particular appear as stodgy and stupid as ever, making the kinds of bad business decisions that invite more problems than viable solutions. The recent trials of the rock band Wilco perfectly encapsulate the sheer lunacy that drives the publicly traded side of the industry, and chances are, after all the dust has settled, the band’s story will reveal the full folly of their corporate handlers.

If critical acclaim translated to cash, Wilco would be richer than Michael Jackson. But even on a more realistic scale, Wilco seem like any record label’s best friend. Wilco’s three albums have sold respectably, certainly offsetting the relatively modest recording and promotions costs accrued by the band. Plus, Wilco have built such a dedicated fan base that their cross-country tours sell out handily. Yet when the band turned in its fourth album Yankee Hotel Foxtrot to Reprise (part of the AOL Time Warner juggernaut) it got a familiar refrain in lieu of gratitude and constructive feedback: “We don’t hear a single.”

pparently this wasn’t Wilco’s first time butting heads with the suits. After completing their second album Being There, Wilco refused to trim the two-disc set down to satisfy the label’s demands, and instead insisted that it be released not only as is, but at a budget price as well. Next came Summerteeth, an even more radical break with the band’s alt-country roots that still stands as one of the best albums of the ’90s. Again, Reprise differed, sending the band back into the studio to polish up the disc in hopes of radio play.

None of this affected singer/songwriter Jeff Tweedy too terribly. He and the band continued to evolve on the road and in the studio, bookending Summerteeth with two successful albums of Woody Guthrie songs performed with Billy Bragg before preparing for album No. 4. Tweedy’s evolution as a songwriter led to a parting of ways with longtime drummer Ken Coomer right before recording began. Coomer was replaced by Glenn Kotche, whose experimental cred matched that of out-rock maven Jim O’Rourke, who himself was brought in to engineer the album.

Initial reports last spring claimed Yankee Hotel Foxtrot had more in common with early Pink Floyd than Gram Parsons, which might explain the reluctance of the label to foist the album upon the world. But when Wilco performed several of the new songs for a massive outdoor crowd at a Chicago Fourth of July festival last year—a performance that would turn out to be multi-instrumentalist Jay Bennett’s last with Wilco—the fans embraced the fresh material as enthusiastically as they did the old. Sure, some songs were weird—the abstract “I Am Trying to Break Your Heart” was a lot harder to get a bead on than, say, Wilco’s early anthem “Passenger Side”—but the Yankee Hotel Foxtrot music was hardly the commercial suicide some suggested it would be.

While Wilco and the suits tussled over the album’s release, copies of the disc were leaked onto the Internet and circulated among fans. Later the band itself posted the album on its own Web site, allowing anyone to stream the entire disc. Eventually Wilco won its way, or at least a way out: Reprise let them slip out of their contract without a fight.

But a funny thing had happened in the interim. By the time the band was free, the buzz surrounding Yankee Hotel Foxtrot was deafening, stunning enough that Reprise tried to lure the group back even as Wilco fielded more than 30 offers from every stripe of label. After a long period of deliberation, Wilco chose the eclectic, artist-friendly and semi-independent Nonesuch imprint—itself another tentacle of AOL Time Warner, which therefore effectively bought the album twice. Rumor has it that the man responsible for the Wilco debacle over at Reprise was, in industry terms, “dropped.”

At last, a release date for the disc was set, nearly a year after it was originally scheduled. In the meantime, Wilco toured nearly nonstop, supporting an unreleased album with a string of sold-out shows. At a recent March date in Anaheim, California, Tweedy asked the crowd how many of them had downloaded Yankee Hotel Foxtrot. Seeing a sea of hands, perhaps a quarter of the audience, Tweedy seemed satisfied. “Good,” he said. “Tell all your friends about it.”

he power of Yankee Hotel Foxtrot could allow it to transcend the buzz and become the unlikely hit that many claimed Wilco could never have. At the Anaheim show, fans took in the new material, played almost in its entirety, with rapt silence. Kotche’s subtle drumming gently propelled the beautiful “Jesus, etc.” while Tweedy’s cracked voice lent “Ashes of American Flags” as much poignancy as it would have been automatically accorded had the album been released, as was also once scheduled, on September 11. During the astoundingly beautiful “Reservations,” the album’s closer, some people actually sobbed. With Leroy Bach replacing Bennett, the band capably drifted from the moody new material back through the pure pop of Summerteeth and the eclectic Being There.

“I still love rock ’n’ roll,” howled Tweedy at the end of “Misunderstood,” as if reiterating a tacit belief that rock ’n’ roll encompasses all kinds of music, much of it deemed uncommercial just because no one is willing to take a risk on it. But Wilco take the kinds of risks that labels should be embracing. For the amount of money Virgin spent to court and then drop Mariah Carey, for example, it could have signed 100 Wilcos, each profitable in its own right. The recording industry claims its profits dropped significantly over the past year, but that deficit can be accounted for only among the top-selling mega-acts. If the majors paid as much attention to the hundreds of other bands on their rosters, maybe they wouldn’t be crying to a consumer base steadily taking its business elsewhere.

Joshua Klein, a freelance critic, also writes for the Chicago Tribune and the Washington Post.