Changes to intellectual property (IP) systems, including copyright, could add up to £7.9 billion to the UK's economy, according to a review.
The Government welcomed findings of the six-month study, led by Professor Ian Hargreaves, which were aimed at adding up to 0.6% to annual GDP and would cut the costs of IP-related business by £750 million within a decade.
Recommendations included a digital marketplace where licences in copyright content could be bought and sold, described as an online copyright shop, and updating what is lawful to copy, such as copying music from a laptop to an mp3 player for private purposes, and digital copying of medical and other journals for computerised analysis in research.
Prof Hargreaves said: "In recent years, the UK has failed to make the changes needed to modernise copyright law, for which we will pay an increasing economic price as we make our way into the third decade of the commercial internet. My recommendations set out how the IP framework can promote innovation and economic growth in the UK economy.
"The recommendations of the review are designed to enhance the economic potential of the UK's creative industries and to ensure that the emergence of high technology businesses, especially smaller businesses, in other sectors is not impeded by our IP laws."
Business Secretary Vince Cable said: "The Government is wholly focused on boosting growth, and we can't afford to shy away from looking at complicated or controversial areas. That's why I welcome this report and its clear link between intellectual property and potential economic growth.
"The report highlights real scope for changes to copyright laws which could add enormous value to the UK economy.
"Intellectual property has an enormous impact on individuals, businesses and industries across the UK.
"It affects what we can and can't do in business, education and in our daily lives. Technological innovation, successful creative businesses and strong international brands need to thrive."
Chancellor George Osborne said: "It is vital that our intellectual property laws incentivise innovation and investment, helping to drive the private sector-led economic recovery."
Christine Payne, general secretary of Equity and chairman of the Creative Coalition Campaign, said: "We are delighted that Prof Hargreaves has listened to the creative sector and has rejected moves to change the fundamental principles behind UK copyright law, which would have damaged investment in the UK's creative industries."