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In its annual Digital Music Survey, Entertainment Media Research found that illegal music file sharing remains widespread, despite concerted attempts to curb it. Of the 1,700 people questioned, 43% said that they are downloading music using P2P networks, up from 36% last year.

The rise coincides with declining growth in digital music sales and the failure of legal threats to act as a deterrent to sharing. Only 33% said that the risk of prosecution was a deterrent,

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down from 42% in 2006.

The survey also that 18% of respondents intended to download more unauthorised tracks, up from 8% in 2006.

DRM, on the other hand, does not appear to have a significant effect. Of those surveyed, 37% had never heard of it and only 12% said they know exactly what it means. Nonetheless 39% said that they would be happy to pay "a little extra" for DRM-free tracks.

The report concludes that to cut sharing and increased demand for commercial downloading, the music industry needs to consider introducing differential pricing. It said 84% of consumers agreed that older digital downloads should be cheaper and 48% claimed they would be prepared to pay more for newly-released tracks.

But the industry said that business models could not, on their own, provide a solution. "Industry cannot do it alone," claims a spokesman for the BPI, the UK's leading trade body. "ISPs as gatekeepers, and government as legislators, must also play an active role in tackling copyright theft if the UK is to thrive as a knowledge economy."