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Creative industries want to protect their earnings in the face of Internet distribution and piracy, but influential consumer groups believe their tactics are heavy handed, and that the laws governing copyright are 'outdated' and 'absurd'.

'We need to shake up the copyright law to incorporate consumers' 'fair use' rights, including the right to copy for private use,' said Jill Johnstone, director of policy at the National Consumer Council.

According to a YouGov poll, nearly one in six Britons are breaking copyright rules by copying CDs to play on digital music players, and most of them don't even know they're infringing regulations.

'It's just plain silly that we have no right to copy. If people have paid for music, they ought to be able to play that on whatever they choose, whether it's their stereo, computer or iPod,' said Johnstone.

The issue is the focus of the Treasury-commissioned independent Gowers Review, which is expected to be presented to parliament this autumn, as politicians try to update intellectual property laws in the UK and bring them into line with the European Union Copyright Directive (EUCD).

Britain is a European oddity in maintaining a ban on personal copies of music, but the UK recording industry's trade group, the BPI, says it's prepared to negotiate and even introduce music licences to allow consumers to transfer music between devices. It makes no guarantees, though.

'We know people are copying files for personal use, which in principle is no problem, but we want to work out how we can license this so people can make copies without breaking the law - but we don't want to change the law,' said Matt Phillips, communications manager at the BPI.

While such a concession could be seen as a victory for consumers, precedents in Europe suggest that allowing copying could lead to levies being charged on computing hardware and storage media.

In the rest of Europe, most countries have imposed levies designed to recompense

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copyright holders for lost earnings. Belgium charges 1.5 per cent to 3 per cent on the wholesale price of all audio and video devices, as well as up to €0.60 an hour for audio storage media.

In Greece, recordable media and devices suffer a 6 per cent levy, while in Germany even the lowly CD burner attracts a levy of up €20. According to the Copyright Levies Reform Alliance, tariffs on a typical home office with a PC, printer, scanner and DVD burner could add €147 to retail prices if a German court rules that PCs, like video recorders, are copying tools.

'If these levy claims are approved by the Federal Supreme Court, such judgments will not only seriously affect the price of PCs and peripherals in Germany, but are likely to be a negative role model for other European jurisdictions, which will also face material price increases in hardware,' says a report by Alexander Duisberg and Fabian Niemann of international law firm Bird & Bird.

'All hardware and media that can reproduce third party content may be subject to levy claims - not only obvious devices like MP3 players and PVRs, but also mobile phones, BlackBerrys and PDAs.'

The additional cost of levies has a negative effect on sales, so are predictably criticised by the IT manufacturers, which say the funds don't necessarily go to the right copyright holders.

'Copyright levies on digital products are an outdated form of taxation that penalises consumers, artists and industry alike. European lawmakers have an obligation to establish efficiency and transparency in collecting levies while phasing out the levies system,' said Mark MacGann, director general of European digital technology industry group EICTA.

'They're an unfair, indiscriminate and non-transparent tax on consumers.'

So is it a clear choice between restrictions on copying and levies? Apparently not; the EUCD allows member states to pick and choose from a host of directive elements. France has riled the copyright lobbyists by proposing lax laws, while Finland threw the regulatory form book out the window, introducing an effective ban on copying for personal use. Crucially, though, the existing levies remain in place.

The battle lines have been drawn, but the fear is that lobbyists, rich with the dollars of large media companies, could skew new legislation in their favour.

'We'll fight for the consumer and hope the Gowers Review brings reform, but the lobbyists have a lot more money than consumer groups,' said Johnstone. It's hard to see the media moguls suffering any sort of knockout blow.