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Edgar Bronfman, Warner's CEO, said that the e-label would allow it to release music from new and niche artists without incurring the cost of recording a whole album.

Somewhat surprisingly he added that the artists would retain ownership of the recordings and copyright, almost unheard of in the industry but presumably a way of sweetening what many artists will see as a cut-price record deal.

Bronfman also said in his speech to the Progress and Freedom Foundation, a US conservative think-tank, that the music industry and technology companies, notably peer-to-peer software makers, need to put their differences behind them and work together.

'Technology shapes music,' he said.

He argued that the P2P services had destroyed this relationship but conceded that the record labels had also made mistakes by refusing to accept that the Internet, and downloads in particular, would be central to the future of the industry. Music fans, by downloading millions of free songs, told them otherwise and for a while it looked as if free music was here to stay. But the tide may finally be about to turn following the Supreme Court's June ruling that P2P software is, effectively, illegal.

However Bronfman's newly found enthusiasm for P2P technology, if not the practice, does not go as far as ceding to P2P companies' suggestion that the US government force labels to license their recordings.

In fact he said that he is opposed to any kind of government intervention, whether it is compulsory licensing or forcing companies to open up their DRM technologies. And this despite the industry's desired aim of complete interoperability between music downloads and portable players.

'The consumers' digital music experience should be as seamless and rewarding as possible, but we would be hypocrites to suggest that the government should force interoperability standards on devices while at the same time insisting there is no need for compulsory licensing,' he said.