A new paper written by Bart Cammaerts and Bingchun Meng of the London School of Economics concluded that the decline in sales of physical copies of recorded music cannot be attributed solely to file sharing. Global recorded music sales between 2000 and 2010. There was a combination of factors at play such as changing patterns in music consumption, decreasing disposable household incomes for leisure products and increasing sales of digital content through online platforms. The paper said that efforts by the music industry to suppress the use of technological advances like peer-to-peer file sharing in order to protect out-of-date business models had stifled innovation in the industry. Further, illegal downloading has only continued unabated. The industry should instead focus on harnessing such technologies to provide "user-friendly, hassle-free solutions to enable users to download music legally at a reasonable price".

"The negative framing of the debate about file-sharing and copyright protection threatens to stifle the very same creative industry [copyright law] aims to stimulate," the researchers found. The music industry recently won its case against popular file-sharing service Limewire. The case has now moved on to damages and the industry is claiming it is entitled to $US75 trillion in damages - a figure which the judge in the case labelled "absurd". People spending more on live music While record label revenues have declined, official music industry figures did not include revenue earned by artists from live performances. Figures from Britain for 2009 show that the live music scene, at around 1.54 billion pounds, was actually larger than the music recording industry, worth 1.36 billion pounds. Furthermore, recent moves by the industry to embrace new technologies like online streaming services appear to be bearing fruit and converting illegal downloaders to legitimate services, the paper found. A recent Ovum research report estimated the digital music industry would grow by 60 per cent to $US20 billion by 2015.

Separately, another new paper by University of Minnesota economist Joel Waldfogel found there was no evidence that the quantity of new recorded music or artists had been affected by file-sharing over the past decade. The industry has consistently claimed that revenue lost to piracy has meant there is little money to invest in new artists. New music discovered outside the big labels Professor Waldfogel found that file sharing had undermined copyright protection on recorded music but "the supply of recorded music appears not to have fallen off much since Napster, and there is at least suggestive evidence that independent music labels , which operate with lower break-even thresholds, are playing an increased role in bringing new works to market". Around the world, copyright holders are lobbying governments to implement new laws that would force ISPs to send warning notices to - and eventually penalise - customers who have been identified by the entertainment industry as repeated illegal downloaders.

In Australia, ISPs have strongly resisted any such measures, saying that it should only be the courts that decide whether someone has broken the law. The Communications Minister, Stephen Conroy, and the Attorney-General, Robert McClelland, say they would prefer an industry-negotiated solution rather than new legislation. File-sharing genie is out of the bottle The London School of Economics paper argues that even with new laws cracking down on file sharers, the music industry would never be able to return to the heady days of yesteryear. It posits that consumers' money for entertainment is now being spread across a diverse array of services including video games. Between 2003 and 2008 the music industry in the US brought lawsuits against 30,000 people to send a message to illegal file sharers but this has done little to stop the growth of the practice. "Warnings and legal threats are unlikely to drastically curtail file-sharing in the long run," Cammaerts and Meng wrote.

'Licence to download' One solution the pair offer is to implement a levy that could be included in the cost of an internet connection - which they dub a "licence to download". The proceeds of this could then be distributed among rightsholders. The anti-piracy arm of the Australian music industry, Music Industry Piracy Investigations (MIPI), did not respond to a request for comment. However, former MIPI boss Michael Speck, who ran the landmark lawsuit against Kazaa and is now working on new technologies to convert illegal downloads into legitimate sales, was highly critical of the London School of Economics study. "The proposition that the drop in sales is a result of diminishing funds for discretionary spending - if this were so then how is it that of all the discretionary spends possible music is the one that all consumers across all markets simultaneously singled out?," he said.

"It beggars belief that in the face of such obviously outrageous volumes of misappropriation some content industries still struggle to convince the public about the scale of the crime taking place here." Colin Jacobs, chair of the online users' lobby group Electronic Frontiers Australia, said evolving their business to fit the times, not illegal downloading, was the problem the music industry needed to focus on. "The digital revolution offers phenomenal opportunities for distribution and promotion, and the industry is leaving these opportunities on the table," he said. Record labels slow to evolve Jacobs conceded that the industry had in fact made some progress in recent times, such as by abandoning restrictive digital rights management (DRM) locks on music files and by supporting streaming services like Spotify and Pandora.

But he said each of these advances had taken years longer to be implemented than they should have, which pushed some people to piracy. "The industry has blamed filesharing for their woes. In part, they are right; often, the product available illegally on a P2P network is noticeably superior to the legal product (easy to get, DRM-free, etc)," said Jacobs. Guy Cranswick, an analyst at Australian research firm IBRS, is sceptical about whether new business models like streaming will offer a solution to the issues faced by the record labels. "The fact is that all the other business models like streaming do not produce the revenues they need," he said. Loading

"Peter Gabriel and Mick Jagger have said that the music industry had a business that lasted from about 1970 to about 2003. So while the labels experiment with new models they really want the thing to be like it was before the net and digital as the marginal revenue was so good to them." This reporter is on Twitter: @ashermoses