People who illegally download music from the internet also spend more money on music than anyone else, according to a new study. The survey, published today, found that those who admit illegally downloading music spent an average of £77 a year on music – £33 more than those who claim that they never download music dishonestly.

The findings suggest that plans by the Secretary of State for Business, Peter Mandelson, to crack down on illegal downloaders by threatening to cut their internet connections with a "three strikes and you're out" rule could harm the music industry by punishing its core customers.

An estimated seven million UK users download files illegally every year. The record industry's trade association, the British Phonographic Industry (BPI), believes this copyright infringement will cost the industry £200m this year.

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The poll, which surveyed 1,000 16- to 50-year-olds with internet access, found that one in 10 people admit to downloading music illegally.

"The latest approach from the Government will not help prop up an ailing music industry. Politicians and music companies need to recognise that the nature of music consumption has changed, and consumers are demanding lower prices and easier access," said Peter Bradwell, from the think-tank Demos, which commissioned the new poll conducted by Ipsos Mori.

However, music industry figures insist the figures offer a skewed picture. The poll suggested the Government's plan to disconnect illegal downloaders if they ignore official warning letters could deter people from internet piracy, with 61 per cent of illegal downloaders surveyed admitting they would be put off downloading music illegally by the threat of having their internet service cut off for a month.

"The people who file-share are the ones who are interested in music," said Mark Mulligan of Forrester Research. "They use file-sharing as a discovery mechanism. We have a generation of young people who don't have any concept of music as a paid-for commodity," he continued. "You need to have it at a price point you won't notice."

The Digital Economy Bill, which will become law next April, sets out new measures to crack down on internet piracy. But these have generated criticism from internet service providers, who say they will be difficult to enforce.

Artists are also divided over the issue, with Lily Allen and James Blunt recently supporting the Government's stance, while the Latin pop star Shakira argues that illegal file sharing brings her closer to her fans.

This year Virgin Media and Universal Music plan to launch the first music subscription service allowing customers to download and keep unlimited tracks from Universal's catalogue for a fee of around £15.