In September 2010, The Herald ran a feature headlined On the Track of a Scots Gong, looking at the case for introducing a Barclaycard Mercury Prize-style Album of the Year Award in Scotland.

In making the argument we uncovered the ambitions of the Scottish Music Industry Association (SMIA) to do just that.

Today sees the fruition of that plan, as the SMIA launches the Scottish Album of the Year (SAY) Award – a major new arts prize backed by Creative Scotland.

With a £20,000 first prize (a sum equal to the Barclaycard Mercury Prize windfall), plus £1000 each for nine runners-up, the inaugural Scottish Album of the Year Award will celebrate the best Scottish albums of 2011 from any genre (pop, rock, electronic, folk, jazz, classical and beyond), as variously elected by a public vote, 100 industry "nominators" and a 10-strong judging panel chaired by academic, former journalist at The Herald and Belle and Sebastian manager John Williamson. The judges include Turner prize-winner Susan Philipsz, Canongate Books' editorial director Francis Bickmore, musician and broadcaster Mary Ann Kennedy, Optimo DJ Keith McIvor (aka JD Twitch), and The Herald's arts editor Keith Bruce. They'll elect and announce the winning album in a ceremony at Glasgow Film City on June 19.

The SMIA's Stewart Henderson is co-director of independent Glasgow label Chemikal Underground, and a former member of Barclaycard Mercury Prize nominees The Delgados. He identifies key attributes of the SAY Award as inclusion (unlike the Barclaycard Mercury Prize, there is no required entry fee or marketing spend from labels or artists), innovation (a free SAY Award app will stream music from nominated acts) and accessibility (the award will be backed by a high-profile marketing campaign). "On the one hand it's a celebration of the album specifically, and of our industry in general," says Henderson. "On the other hand, it's a retail-focused exercise: it's about trying to reconnect music fans with a sense of support, and ownership, to all of these amazing artists who are making music in our country."

The 20-album SAY Award longlist, as chosen by 100 "nominators" from across the Scottish music industry and the arts, will be announced on April 12. "The range of sectors and genres that we've pulled together for this is unprecedented," Henderson enthuses. "We want to use that as a platform to bring all of these different genres together and to celebrate them on a level playing field – to say, 'This is what we're capable of in Scotland. Look how diverse these albums are, look how challenging they are. Look how entertaining they are.'"

A 10-album shortlist will then be announced on May 17, as selected by the judging panel (nine albums) and public vote (one album) – with the latter driven by a free app which will stream tracks and the long-listed albums in turn, offering music fans the chance to share the judges' listening experience.

Henderson is particularly enthused about the SAY Award's retail strategy, which will include in-store performances. "Several independent record shops were involved in the nomination process," he offers. "iTunes are giving this the same level of profile they'd give the Mercury or the Brit Awards, Fopp have been really supportive, and HMV are going to be doing SAY Award front window displays in every store in Scotland. From a retail point of view, we can't give ourselves a higher-profile platform to promote these records."

For singer-songwriter Karine Polwart, a multiple BBC Folk Award winner, the SAY Award's retail presence could offer musicians an exceptional practical benefit. "That kind of thing could be brilliant, because it's something you wouldn't ordinarily get," she says. "From my own experience, getting someone in HMV or the indie stores to stock your stuff at the front of the shop, not just in the folk section or whatever, can make a massive difference to sales."

Polwart, a member of indie-folk supergroup The Burns Unit, also commends the award's potential to breach pigeonholes and rouse debate. "I know people are sceptical about awards, and of course making music is not about competition, but it's undeniable that the idea of an award gets people talking," she says. "And having a forum to talk about music which is not genre-specific, I think that's amazing. Because to me, that's what the Scottish music scene is. Musicians work across genre divides: people on the indie scene work with the folk scene who work with the jazz guys, and classical musicians like Mr McFall's Chamber are really well integrated too."

Scottish jazz maestro Tommy Smith, whose 2011 album Karma is eligible for the SAY Award, agrees. "Scottish music is a broad church – I've got Japanese, Arabic, Indian and folk music on my latest record – but I think there's commonality amongst the different genres too. I totally applaud and admire what [the SMIA] are doing. I think it'll open people's ears up to other music."

Singer-songwriter and Fence Records boss Kenny Anderson, aka King Creosote, was a favourite to win last year's Barclaycard Mercury Prize thanks to his album with Jon Hopkins, Diamond Mine. (It is also eligible for the SAY Award.) He hopes the award will offer a platform to spotlight, and support, the plight of our industry.

"The value of recorded music is far, far below the level it needs to be to sustain bands, venues, studios, tours and shops," he offers.

"Our scene is dwindling with each year – mid-sized venues are closing, shops all but gone, the remaining studios are in trouble. I'd hope the award would make one album desirable enough that its value increased, helping all of us to hike our prices. I'd hope the award would make people value music more."

Henderson acknowledges that there will always be divided camps in an awards campaign such as this. For every argument in favour of retail promotions, there is one against discounting records; for every person in favour of digital streaming, there's another against making music freely available.

"Everything about this award has been, and will continue to be, a high-wire act," he admits. "It's about striking a balance. But I strongly believe we owe it to the artists to give them the highest-possible profile and opportunity for their music to be heard, and hopefully bought.

"Some people have taken a lot of convincing about the award," he continues. "I'm pleased – I'm almost proud that people are so desperate to grill the SMIA, grill me, about it, because it shows that they care as much about the Scottish music industry as we do. It shows that people want this award to be good. They want it to work. We all want it to be worthy of the talent it is celebrating."

www.sayaward.com.