"Ensuring record companies are adequately and reliably recompensed for the use of their copyrights on the internet is the number one issue for our business," said BPI - the UK recording industry body - chairman Peter Jamieson.

"The BPI welcomes the innovative thinking which has gone into the creation of Playlouder MSP and we give it our full support."

Acts under the Sony BMG umbrella include Beyonce, David Bowie, Macy Gray, Oasis, Travis, Will Young, Outkast, Alicia Keys and Dido.

Broadly welcomed

The deal signals the first time that music fans can use existing popular peer-to-peer (P2P) applications such as Kazaa, eDonkey and Limewire, to share music in an unrestricted and sanctioned way.

It has been widely welcomed by figures in the music industry, which has tried to battle illegal file-sharing for several years.

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Although legal threats exist, it has had mixed success. P2P sharing is still proving a popular and efficient way to distribute files that people want, quickly.

Sony BMG's Clive Rich recognised that the Playlouder service had tried to keep some of the features that have continued to attract file-sharers since the early illegitimate days of Napster.

"It retains the sense of community and spontaneity which makes P2P and super distribution so attractive to consumers, whilst ensuring that this activity takes place within a framework in which the music can be tracked and rights owners get paid" he said.

In a recent survey of more than 800 online music fans for Playlouder, more than half said they would prefer to download music using legitimate P2P networks over other legal download services, such as iTunes and Napster.

Playlouder said it would use digital fingerprinting techniques to track the sharing of music in any format over its own network.

It added that if all broadband net service providers followed this model, the music industry would have a revenue source of more than £300m a year in the UK, and $13.5bn globally.

The music-based net service provider will offer its basic 1Mbps broadband package at £26.99 a month, and says its network has been specifically designed for downloading files, such as digital music.

What is called "deep packets search" technology is used in Playlouder's network to spot file-sharing traffic so it can be re-routed to Playlouder's "walled garden", allowing only other Playlouder subscribers access to it.

The technology behind Playlouder's service is provided by Audible Magic.