Three years ago the alternative music industry seemed determined to talk itself into a coma. You couldn’t open a magazine or turn on the radio without suffering some whinging executive complaining about the internet killing music. Fans who downloaded for free were thieves who wanted music to die. Bands were struggling and it was going to get worse, because nobody bought records anymore. The singles chart was dying, and the album chart was increasingly getting sucked into the Christmas-shaped black hole of endless re-issues with names like Elton’s Greatest Hits… Again. In this climate, where were new bands going to come from and how were they going to survive?

Some complainers were genuinely worried that a direct consequence of belt-tightening in the music industry would be young bands having to prove themselves fast or be dropped, creating an increased pressure to be commercial, and resulting in more challenging fare fading from view fast. But this has always been the case – there has always been a bogeyman of some sort – remember ‘hometaping is killing music’?

In 2008 the alternative music world has not caved in on itself, the internet has become a way for bands to grow while staying independent, and the collapse of the singles treadmill has been great news for anyone who doesn’t make easily digestible, three-minute disposable junk.

On both sides of the Atlantic the results are encouraging – the success of bands like TV On The Radio is a living, breathing reason-to-be-cheerful about the future. Three albums in, no hits, no consciously shaped image and no sell-outs to adverts, TVOTR make uncompromising music that defies trends and is now officially, bafflingly, popular. Spin magazine in America calls them ‘rock’s most visionary crew’, a bunch of revolving producer/multi-instrumentalists who don’t pay any attention to the so-called rules of how to succeed. So how do bands like these do it, and how is the system changing?

The saviour of alternative music has been a mix of the new (the internet) and the old-fashioned (the live circuit, which is now where most bands make their money). When TVOTR played their first raucous show in Glasgow five years ago it was at Nice ‘n’ Sleazy’s. The crowd came mostly via word-of-mouth recommendation. They’d sold virtually no records but it didn’t matter. Each person who saw them told someone else, who told someone else, and the next time they came back, the venue was bigger. This month they play the ABC, and venues of similar size all over Europe and America, having done the same word-of-mouth trick everywhere. This strategy has big advantages – the band has been able to hone their live show, test out material on smaller audiences, and steadily get more ambitious as they’ve gone on, and have avoided being drowned by commercial pressure. Bands who hit the jackpot on their first album (then have no idea how to follow it up) would benefit from this approach, which ultimately makes for better music, and, handily enough for managers, also better money-making. Eventually.

TVOTR’s early experimental material was patchy, but singles like ‘Staring at the Sun’ showed signs of something special. ‘I Was a Lover’ and ‘Wolf Like Me’ from 2006’s Return to Cookie Mountain showed a rise in both confidence and consistency. New album Dear Science is the one they’ve been threatening to make for five years. Tracks like ‘Golden Age’ and ‘Crying’ mark the band’s evolution into a falsetto-led dance outfit with funk beats, and elsewhere ‘Dancing Choose’, sees a three-piece brass section competing with swirling, escalating guitars and Tunde Adebimpe’s fast-rap vocals. Later on the record the powerful ‘Death Professor’ takes the more visceral, direct route, while ‘Family Tree’ is the most heartfelt thing they’ve done yet. These songs could be by four different, very good bands. The success of Dear Science, and other records like it prove that fans don’t just want twelve almost-identical flavours on an album.

You still won’t find a band like TVOTR in the top ten, but that’s fine – the industry works differently now, and it’s no longer strange to see a band like TVOTR performing on the steps of the fire escape of the David Letterman building. In fact, these late-night, high-ratings shows have become home turf to alternative bands such as Band of Horses. MGMT and The National, who famously played a near-perfect version of ‘Fake Empire’ on Letterman – an understated, lyrically twisted song that doesn’t have a chorus and wasn’t even a single – that really got the band noticed through repeated YouTube viewings. Even more accessible rockers Kings of Leon needed four albums to get to number one, taking six years to become the assured, all-consuming stadium rock band of ‘Sex on Fire’ and new album Only By the Night. All these bands are carving out a niche in a changing, fragmenting industry. Pretty strong signs of life three years on from the supposed apocalypse of 2005.

And it’s not just on the other side of the Atlantic that things are changing. The case of Elbow shows some bands are like a good wine – they need a little love, time and patience. Dropped by their first label before their debut even came out, Elbow have always been both critical successes and commercial underachievers. The only band ever to have four consecutive 9/10 NME albums reviews, they earned a live reputation slowly, yet after their third album, Leaders of the Free World, they were dropped by V2, and recorded their Mercury Prize winning album The Seldom Seen Kid without knowing whether it would be released.

This perseverance is an example of a truly great band surviving and succeeding despite the music industry, not because of it. You no longer need official support, or to pay millions for a super-producer to sprinkle magic over songs. Stuck for a deal, the band produced and mixed the album themselves and sold it to Fiction Records – who must now be pleased that V2 were so impatient.

Since winning the Mercury, Elbow have released another single, ‘The Bones of You’ from The Seldom Seen Kid, but didn’t bother putting it in shops, opting for the download-only format. Even rock royalty like Radiohead, who could easily go down the traditional route, hardly bother with airplay and singles anymore. There were famously none released off their Kid A album (which went to number one worldwide anyway), and this kind of old-fashioned promotion now seems archaic to a band who released their latest album online, with no advertising and an optional price.

Every case here is different, and for every heartening story there is another frustrating failure. But there’s certainly a trend, and the steady success of bands like TVOTR represents something healthy in otherwise depressing times. Don’t let anyone tell you the bogeyman is coming. He’s at home, happily listening to his iPod. And he’s got pretty good taste.

TV on the Radio play ABC, Glasgow, Sun 16 Nov.