A flip of the Coyne: The Flaming Lips singer and 'nicest man in rock' shows his dark, difficult side

Wayne Coyne, nicest man in rock, is laying into Arcade Fire. Are they the adored Canadian purveyors of spiritually enhanced communal big-rock? No, thinks the Flaming Lips frontman, they're a bunch of assholes. "We were at a festival. It's like all festivals, you're collectively sharing bathrooms and the backstage. A lot of acts were there – Devendra Banhart, Sleater-Kinney. The truth is, they walked in and made everybody leave: 'Listen, the Arcade Fire is here now and you can't be here.' What do you mean we can't be here? This is a festival, we're all here! Some of us wanted to go on stage and actually watch them play, and no one would let us. 'It's Arcade Fire, man, who do you think you are?' What do you mean? We're just groups playing a festival!"

Coyne shakes his greying shock of curly hair.

"I thought, 'What a bunch of...' Why would they do that? Why do they care so much? Why make such a stink?"

Wayne Coyne has been around the rock-block. He formed the Flaming Lips in 1983 and led them through the crazed, noisenik American underground scene of Sub Pop stars such as The Melvins (with whom they first played Seattle), Nirvana, Smashing Pumpkins, Butthole Surfers and the Pixies. Then, once they signed to Warner Bros in the early 1990s, he shepherded them via an unlikely MTV hit ("She Don't Use Jelly") to their current status: a much-loved bunch of pop-psychedelic visionaries who have outlived all their peers.

So a man of his experience can understand how a band might want to appear to an audience, or to the press. But throwing their weight around with their peers – who are Arcade Fire trying to impress? And Coyne knew he wasn't the only one: on the day he first made his comments about the Canadians (to Rolling Stone in spring this year, sparking an indie-rock blogosphere war), he also spoke to two photographers. Both of them were big Arcade Fire fans. And both, as it happened, said working with them was "their worst experience, they treated people very badly".

Rock stars bickering: who cares, right? Its ego-handbags at dawn. But this is different. Wayne Coyne is attacking Arcade Fire not to score points. He's sticking his normally thoroughly mellow head above the parapet out of duty. Wayne Coyne and the band of Oklahoma City dreamers that he's led for 26 years have not come to save rock – they wouldn't be so grand – but they're here to glory in it. Don't let the grumpy bastards grind you down.

"People should be kind, should be grateful, should be glad for the situation they're in! We're lucky to be here!" exclaims Coyne, 48 years young and a man who knows of what he speaks – for the first decade of Flaming Lips' life he maintained a day-job frying fish; he's been surrounded by heroin addiction all his life. He knows the way things could have gone, and the way they can go if you're smart and cool.

"There's no excuse for anybody to be mean or feel like they're more important. You talk to Justin Timberlake" – the singer dressed as a dolphin and joined the Flaming Lips onstage at Top of the Pops in 2003 to sing "Yoshimi Battles the Pink Robots" – "or you talk to Nick Cave" – the Australian post-punk polymath sang "What a Wonderful World" with the Lips when they toured together on the 1994 Lollapalooza festival – "and they understand that everybody's lucky. It's the people who don't understand what all this is..."

Another shake of the head and a squinty, crinkly gaze at his surroundings. "I know how lucky you are to ever have any success at any of this."

It's a glorious late-summer day in Washington State, and in a country park a few miles outside Seattle, the Flaming Lips are preparing to crank up their space-panto extravaganza for 4,000 punters: college students, high-schoolers, boys and girls, mums and dads, little kiddywinks. Many will come in fancy dress, as is Lips tradition. This is as inclusive and friendly as mind-melting indie-rock gets and, yes, throughout the celebratory concert, marijuana will be smoked.

The merchandise stall unpacks its wares. T-shirts saying "I Experienced the Flaming Lips in Concert and it Made Me a Better Person". Little red lasers with which concert-goers are encouraged to strafe the night sky at a given moment. And little bottles of The Flaming Lips Hot Sauce. These "three drops of death", blended by a friend of the band, are at once fruity (the first ingredients are pineapple and pineapple juice), spicy (Habanero pepper) and feisty (St Arnold Fancy Lawnmower Beer). Just like the band.

This run of US outdoor shows is in support of the band's 12th album, Embryonic. In an ideal world, the album would have been out before the tour. Now it's coming out two months afterwards. No matter, Coyne shrugs, smiling his ever-ready smile. It's good to be on the road.

In any case, it's not as if Embryonic is of a piece with their last three albums, The Soft Bulletin (1999), Yoshimi Battles the Pink Robots (2002), and At War with the Mystics (2006): pop-psychedelic masterpieces that, in each case, had a couple of beautiful, sing-a-long, radio-friendly "break-out" songs – "Do You Realize??", "Waitin' for a Superman" or "The Yeah Yeah Yeah Song". Embryonic, harking back to the Flaming Lips' early days, as far-out purveyors of post-punk, pre-grunge art-rock, is a double album of cosmic freakery. Not much of it readily lends itself to being played live, and indeed they will only play one of its 18 songs tonight.

Coyne says that, when he, bass/keyboard player Michael Ivins, multi-instrumentalist Steven Drozd and drummer Kliph Scurlock began to think about recording this album in January, they knew they had "all these piles of songs"; that they would be making a double album; and that they would be making it in the upstate New York studio of producer Dave Fridmann, a longtime friend and collaborator who performs similar duties with the equally cult Mercury Rev.

"After a dozen or so records you kind of have an idea of how you're gonna do stuff," says Coyne. "The piles of songs get honed down to 10, 11 songs that are great songs. Then you've got this other pile of self-indulgent bullshit... And we," he adds brightly, "went straight to the indulgent shit! And the more we started to work on what we thought of as the rackety, self-indulgent, radical freaky filler – well, we just never went back to that other stuff."

So, junk a "lost album" of pop songs and release the mental stuff: it's the inverse of what imaginative bands would do. But it's typical of the Flaming Lips, a band who spent years making a movie, Christmas on Mars, largely in Coyne's junk-strewn backyard in Oklahoma City, and who once made an album (1997's Zaireeka) that only "worked" if played on four CD players simultaneously.

On one level, making a wiggy 18-track double album just at the point where, after 25-plus years of making music, your commercial stock has never been higher is the height of egomaniacal indulgence. The Lips have had a Brit nomination, and "Do You Realize??" has been declared the Official Rock Song of their home state of Oklahoma. But on another, Coyne-ian level, why else would he be here if not to indulge himself? The fans, he says, understand this.

"The Flaming Lips audience, if anything, would want me to go insane and sing about that. I have complete freedom to do whatever I want. To sit here and think I'm gonna try and be clever and second guess what's gonna make us more successful – I really don't give a shit. That leaves me ultimately free to say, 'Sorry if I made a crappy record: I was just doing whatever shit drew me along with it, and I was a slave to it. And if it's great, good. If it's horrible, I was just along for the ride.'" Again, that shit-eating grin.

Wayne Coyne, clad in the snug, off-white linen suit that he often wears, is roaming around amid the giant conifers backstage at the 600-acre Marymoor Park in Redmond, Washington, dispensing bonhomie wherever he goes. It's a few hours before showtime. The day's schedule, pinned to the gate backstage, notes that at noon, "CO2 arrives".

The singer points at an orange wheelie-bin parked outside one of two huge trucks bearing "Oklahoma OK!" numberplates. Spilling out of the bin is a giant purple caterpillar costume. Coyne, happily married, is a man who uses his offstage, out-of-studio time to scour costumiers and junk shops.He is proud of this new addition to the Lips' dressing-up box. So much so that he decides to climb into the purple caterpillar outfit. He's still wearing his linen suit.

Meanwhile, roadies are busy setting up the stage. Everything on it is orange: amps, leads, rigging. And so are the roadies. Why? "If you're wearing orange boiler suits it's a universal sign that says 'I'm here to fix your cable TV or the toilet or I'm an electrician.' I was inspired by seeing the workers on the bullet train in Tokyo. They had these immaculate suits. They're dressed better than the business guys. And you know, our guys in our road crew have so much stuff to do – they build the sets and they're up there with us all during the show. We wanted the audience to know that these guys are working for us. These aren't just some hoodlums in black T-shirts standing around. Plus, it gives them a little bit of a mystique or an identity."

And orange uniforms begat orange stage sets.

"Everything looks like it came from some toy manufacturer that's making toys just for us," Coyne observes proudly. "But if you get close you see it's just normal gear covered in duct tape and paint." This, too, he says with some pride – the Flaming Lips' cutting-edge art is a homespun affair. Coyne used to attend the Oklahoma State Fair when ' he was a kid. From a distance it was a grand spectacle; up close, "It was cheap shit. I thought that was great. It wasn't done on some assembly line – someone had made that. It's about making an effort, even if it is kind of strange." Just then a couple of dozen twentysomethings walk by. They're dressed as yetis. They all wave at Coyne. Coyne waves back.

There are guest performers on Embryonic. Last year's hot new American band MGMT contributed to the heavy-synth rock of "Worm Mountain". "They claimed that they built a bonfire outside the studio and burnt Barbie dolls as they wrote. Six of them ran outside and set up a microphone and sang in this big circle and ran round the bonfire. But MGMT probably record all their songs like that..."

But they achieved exactly the vibe Coyne was after: "They make the track sound like this out-of-control séance in the middle of the forest where spirits are being evoked and drugs are being taken and naked people are being roasted."

A celebrated German mathematician named Thorsten Wörmann supplies spoken-word interludes. Why? It's to help "the 17-year-old kid with the iPod know where side two ends and side three begins". No, why a German mathematician? Coyne doesn't know. "He just had an authoritative voice. And when you make records you start collecting interesting bits."

Karen O, of none-more-hip New York trio Yeah Yeah Yeahs, sings backing vocals on the closing "Watching the Planets", a fuzzy, shouty stomp. This contribution was recorded over the telephone in 45 minutes. O, who just released her soundtrack to Spike Jonze's upcoming adaptation of Where the Wild Things Are, is also the voice of "I Can Be a Frog", a song whose roots lie in O's request to Coyne that she do a version of "Watching the Planets" "where I really go crazy. Usually I'm drunk and I'll do the crazy shit. But I'm not drunk right now..."

Coyne, of course, said yes. "And she started to do these things where she would laugh and bark and growl and make all these strange noises." Coyne cut her animal noises to lines he hastily cobbled together: "I can be a frog... I can be a gila monster... I can be a tornado". It's an oddly beautiful song, like a wonky offcut from the children's book The Gruffalo. On acid. Man. "It's just a silly thing," observes Coyne, correctly. "No one else in the world would probably ever wanna do a song like that. Or it would never happen so intuitively or so simply like that. But she's utterly, utterly a star."

What drugs is Wayne Coyne on, and where can we get some? The answer is none. As he once said, "Our music's weird, our lives are normal." A twinkly eyed, quick-brained pop-philosopher, he expands on this for me. He thinks that people who are, in the clichéd sense, rock'n'roll – drug-taking party animals – "have nothing in their minds that they're wishing for. Everything they wanna fuck, everything they wanna drink, everything they wanna do, they're already doing it. Whereas my life has always been stable. I mean, normal to me, anyway. I never took a lot of drugs. I never lived a daredevil lifestyle. I never killed anybody by accident. All the hazards that happen to the dramatic rock stars of our day!

"But I knew, for me, that most of this stuff is happening in your imagination anyway. The challenge is getting it out of your mind and making it real. It's analogous to this: getting a woman pregnant is easy, but raising a child till he's 20 is a lot of hard work." Coyne has hard experience of the damage caused by drugs. His elder brother is a lifelong heroin user, and has been in and out of jail and rehab. Steven Drozd was a heroin addict for a long time, before kicking the habit during the making of Yoshimi Battles the Pink Robots.

"I've seen how drugs totally derail even the most powerful things in people's heads – something like love. My whole life has been spent around people who've done drugs. I grew up in the 1960s and 1970s – there was a time in the 1970s when people thought they were smarter if they took drugs. Well, they weren't right, but they thought they were. So people took them every day, no matter what. You woke up, took some drugs to brush your teeth. I never, because I never liked it. I know that over time it diminishes your capacity to stick with this thing – whether that's sticking with whatever you think is valuable in the world or creating stuff to be around you. It's hard to create your own life. That's why I think creativity is so valued. People don't realise, you gotta create your own experiences in life. There's a lot of choices and a lot of things can happen. But you still create yourself."

Thus, in Wayne's world, for no reason other than that he fancies it, Coyne is creating two videos for "I Can Be a Frog". Both will feature a 19-year-old professional dancer he knows from home. In one, she will wear clothes. In the other, she will be nude. He will be clothed in both. "I would never do a video on purpose where I was naked," he says, hedging his bets. He is also planning a video for "Watching the Planets" (in fact, there may, according to Coyne, eventually be videos for all 18 of Embryonic's songs). Again, the "Watching the Planets" video will be a kit-off affair, filmed at one of the annual nude mass bicycle rides that take place in Portland, Oregon. It's a Coyne kinda place, "an intensely liberal, freaky hippie city". He shrugs again, gives that beatific smile. "I don't know why the idea of nudity seems to fit with this record. But there's something about people getting back to some primitive exploration of themselves. And in rock'n'roll that usually means taking their clothes off."

Thus, in a tangential way, the surreal, vaguely unsettling sleeve art for Embryonic, which again is all Coyne's work. "I can only describe it as the hand of God pulling this young beautiful woman out of Bigfoot's vaginal opening," he says by way of explanation.

And so to Flaming Lips' grand 8.30pm entrance at Marymoor Park. Moving images of a naked woman have been projected on to the back wall of the stage. This footage used to star Coyne's wife, a photographer, but as the woman is squatting I can't see much of her face. Then, a hatch in the stage wall opens between her legs. One by one the band and auxiliary musicians step through, waving.

But not Coyne. He suddenly appears encircled in a giant inflatable see-through ball. He rolls in the ball over the stage and out over the audience. To cheers and whoops, the crowd – which includes a Santa, four Martians, a couple of Oompa-Loompas, possibly a Smurf and a parrot – roll the singer around, before depositing him back on stage. As the band kicks into "Race for the Prize" and orange-clad roadies release balloons and set off streamers and confetti-cannons (that CO2 being put to good use) Coyne bursts out of the ball and starts singing. It's showtime!

By the second song, Coyne is singing from atop a gorilla's shoulders. He prefaces "The Yeah Yeah Yeah" song with a Obama-esque speech about the power of dreams. Soon, a giant frog is grooving stage left, a giant caterpillar is flapping stage right, and in either wing are a dozen of the yeti-clad volunteer fans. The fan in front of me is wearing, on the back of his T-shirt, a sticker courtesy of the support band, Stardeath and White Dwarfs, whose singer is Coyne's nephew Dennis. It says: "Smoking Pot Made Me Not Want to Kill Myself". It's the live U2 spectacular, Blue Peter version, sticky-back plastic and all.

By 10.02pm it's all over bar the confetti clouds. Throughout, Wayne Coyne has sung, dance and smiled, even when firing jets of smoke into the air while banging on a gong. The ecstatic Seattle crowd drift off into the woodland night.

An hour later, Coyne is to be found standing in the gloom backstage, chatting to friends. He's on a (natural) high. He didn't come here to play the rock game and punt his band's contrary new album. He came here to party.

"We wanna play these nice summer places," he says. "You just can't not play in the summer. We'll be playing for the next 100 years anyway! We don't really tour. We just always play and always record. We're the Flaming Lips – we're like Santa Claus. We're either making toys or delivering them to you."

'Embryonic' is out now on Warner Bros. The Flaming Lips play in London, Portsmouth, Glasgow, Manchester and Birmingham next month. www.flaminglips.com for details