Record firms threaten big employers with action to combat piracy

The record industry, struggling to defend itself against the growing problem of CD piracy and illegal music downloads, is threatening to take legal action against some of the world's biggest companies in a new bid to stamp out copyright abuses.

Industry executives claim that many big companies, particularly in North America, have become hot spots for illegal music downloading and file sharing. They warn that they will take tough action against companies whose servers are being used by employees to help themselves to free music.

With global sales of recorded music now in their fourth consecutive year of severe decline, the industry is fighting an increasingly desperate battle to curb piracy and internet downloading from free file-sharing sites like Kazaa and Morpheus.

The issue of piracy is dominating the industry's annual Midem conference, currently under way in Cannes where executives have blamed the telecoms industry for stalling tough European legislation on protecting copyright.

Jay Berman, the head of the International Federation of the Phonographic Industry, told the conference that piracy could put the jobs of 600,000 European music industry jobs at risk if record label executives did not tackle the problem.

IFPI executive director and general counsel, Allen Dixon, confirmed last night that the industry could take targeted legal action against large companies whose servers were being used for music downloading. "Frankly, in this day and age, companies that don't pay attention to their networks – either from a security or a copyright point of view – need a wake-up call."

Late last year the Record Industry Association of America, the IFPI's US counterpart, joined forces with the film industry to write letters to all Fortune 1000 companies on the issue. They also targeted universities.

The RIAA has already resorted to legal action on the issue. Last April it reached a $1m (£620,000) out-of-court settlement with Integrated Information Systems, which had been running a server specifically for employees to download from the internet and share MP3 music files.