U.K. Music, the recently formed umbrella organization encompassing the major British music-industry groups, has declared its support for a co-regulatory system between ISPS, the music industry and a government-appointed body to ensure ISPs tackle illegal P2P file-sharing.

In its contribution to the consultation process set up by the U.K. government's Department for Business Enterprises and Regulatory Reform (BERR), U.K. Music says a government-approved independent adjudicator is required to oversee a co-regulatory system covering ISPs and digital piracy.

"In view of the historic differences between rights holders and ISPs, some form of regulatory control is required," U.K. Music says in its documents. The organization agrees with the government that media and telecommunications regulator Ofcom is the appropriate body.

While the music industry has long been concerned about piracy, the rapidly evolving ISP sector is experiencing slowing growth as broadband penetration starts to saturate.

"A third-party regulator [is] likely to help overcome the mutual caution that has been characteristic of many past discussions between rights holders and ISPs," adds the U.K. Music submission.

The BERR consultation comes after the government demanded that the music industry and Internet Service Providers (ISPs), two industries that have frequently strongly disagreed about how to combat illegal downloads, find a voluntary solution.

It threatened to intervene with legislation next year unless a self-regulatory solution was found.

This led to the groundbreaking memorandum of understanding (MOU) signed in July by the music industry and the ISPs.

For the first time, ISPs agreed to help offer legitimate digital-music services that would lure consumers away from illegal services; increase awareness and understanding of copyright laws; and discourage infringement with effective sanctions.

The system proposed by the BERR consultion would involve a self-regulatory industry approach designing codes of practice for rights holders and ISPs, education programs, ensuring content is available to consumers in a choice of formats and a range of prices, and letters to suspected peer-to-peer infringers. There would be an obligation for ISPs to take action against subscribers identified as infringing copyright through P2P.

Ofcom would oversee this and have responsibility for approving codes of practice, and would invite rights holders and ISPs to explore ways of dealing with repeat infringers. Members of this group would also look at technical measures such as filtering and marking of content, as well as ways that rights holders can take action against the most serious offenders.

A study commissioned by the U.K. labels body BPI shows that the music industry lost £159 million ($238.5 million) to online copyright theft in 2007, increasing to £180 million ($269.9 million) in 2008. The report, by Jupiter Research, predicts that losses between 2007 and 2012 will be £1.2 billion ($1.8 billion).