Launching a new lobby group, British Musical Rights, record company bosses blamed the telecom industry for undermining its business and called on the Government to set up a task-force to strengthen international copyright agreements.
Beatles producer Sir George Martin and Ashley Slater of the band Freakpower gathered with record company executives because of the threat to their income posed by fans placing CD-quality recordings on the Internet. Anyone with the right technology can download their music and keep it for free.
Slater, whose band had a number one hit with "Tune In Turn On Cop", said: "If my copyright isn't protected I go out - a little twinkly light in the Cool Britannia sign goes out - and I'm just one of tens of thousands of musicians who rely on that.
"It's virtually impossible to earn money through touring. After four years we still owe our record company pounds 350,000."
William Booth of Sony Music said: "My company invests millions of pounds each year in new writing talent and new composers and to recover that money we need to be paid. If we don't get paid because it goes on the Internet we can't continue to make that investment in new talent and we can't continue to pay people to collect money for those new composers."
Internet service providers and telecommunication companies which carried the electronic messages should share some responsibility, he said.
At the heart of the industry's worries is a new digital software - freely available on the Internet - known as MP3 or MPEG, which can take as little three minutes to download a song in perfect digital CD quality from a web site.
Most MP3 sites are created by fans in their bedrooms happy to share their rare tracks and bootleg versions. MP3 aficionados trade songs and whole CDs - if you don't bring something to trade it is known as "leeching". Nevertheless, MP3 versions of CDs get left on the web for anyone to download.
And it only takes one Internet address for a CD of a popular band to become well-known and thousands of copies can be made and thousands of potential sales lost.
In America the record industry, led by David Geffen of Geffen music, has clamped down on MP3 sites, using copyright legislation to close as many as 250. However, the British record industry was told yesterday that as many as 26,000 sites exist on the World Wide Web.
The problem for the authorities is that once closed down fans can set up a new web site or they can disappear into the myriad so-called "chat rooms" and discussion zones of the Internet where they can exchange their music without being traced.
"It can feel quite seedy," says Internet journalist Simon Waldman. "You chat for a bit and then ask them if they have anything to swap. They usually have Pearl Jam or another American band, either that or you get directed to an address for a site in Poland where you can get a free Spice Girls CD."
The overwhelming numbers of young American men using the Internet means that the bands with the largest numbers of free music sites devoted to them tend to be guitar bands like Metallica and Nirvana which has 3,462 MP3 sites compared to Bob Dylan's paltry 546.
In the UK, the British Phonographic Institute has acted to remove unlicensed music from just five sites - but such is the confusion over Internet copyright law that they acted not against students in a back bedrooms but some of Britain's biggest companies. BT, the BBC, Demon Internet and Virgin Net had all unknowingly placed music that could be copied on their sites and the BPI forced them to remove it.
The irony for the music industry is that the Internet is likely to be the distribution system of the future for music sales. Once record companies figure out an encryption technology that allows it to charge people for on-line music, it would have a way to sell CDs without the cost of actually pressing a record and keeping it in an expensive high street shop.
David Bowie and The Rolling Stones have invested in ventures overseen by Larry Rosen, a former record industry executive who has pioneered selling and marketing music on the Internet.
For less well known bands, however, the Internet provides a new way of reaching an audience. Unsigned bands like Nottingham's Slug Oven have created their own sites with playable music that means they can reach more people than they ever will playing in the local pub.
And not everyone agrees that the threat is yet so great: "It is still a long way down the line that hardware that you can download on will be as ubiquitous as the hi-fi," says John Harris of music magazine Select. "And it's wrong that the copyright police should be stamping on 14-year old bedroom enthusiasts."
One 25-year old on-line pirate music specialist is unconcerned about the new lobby group: "By the time they have changed the law to deal with MP3 there will be some new technology along that their law won't cover. It all changes too fast for them."Reuse content