Tom Watson: Heavy-handed regulation will not help to nurture creative talent in the digital age

In tough times there's nothing strange in businesses coming to the Government for help. But there's one type of industry that was established in the lobby chamber long before the credit crunch: publishers and distributors of information goods and, in particular, the music industry.

Challenged by the revolutionary distribution mechanism that is the internet, big publishers are seeing their power and profits diminish.

Faced with the choice of accepting this and innovating or, King Canute-style, staying the tide of change, they're choosing the latter option, and looking to Parliament for help with some legislative sandbags.

Their desires are close to getting realised. In response to music industry demands to fast-track the legal process that sees copyright infringers brought to justice, the Government has entered a final stage of consultation. Proposals to force internet service providers to act against individual citizens alleged to be illicitly swapping copyrighted material are expected in the Queen's Speech.

Large numbers are affected, both in terms of people apparently engaged in illicit file-sharing (estimated at seven million) and the much larger number who might share a home internet connection with these copyright infringers.

But it remains unclear whether re-establishing the market power of the old analogue distribution industries is the best thing policymakers can do to support the thousands of artists, writers and film-makers who want to make a living from their craft in the digital age.

Across the world, ordinary people are beginning to realise their stake in the copyright settlement, and demand that legislators act beyond the interests of the incumbent analogue publishers to secure the future of digital cultural production.

I'm convinced that our economic future is dependent on developing a set of economic and regulatory arrangements (which includes copyright, the mechanism at the heart of the file-sharing debate) to hothouse our digital entrepreneurs. Current proposals appear to me to do nothing for this set of people.

Not only do the sanctions ultimately risk criminalising a large proportion of UK citizens, but they also attach an unbearable burden on an emerging technology that has the power to transform society, with no guarantees at the end that our artists and our culture will get any richer.

A more fruitful path would be to ask why economic and regulatory conditions are not bringing about enough legal alternatives to draw UK consumers away from illicit peer-to-peer sharing. Working on the safe assumptions that (a) people like downloading music from the internet, and (b) most people would prefer not to break the law, we should aim to map a way forward for businesses to take financial advantage of the digital market.

It is clear that the big corporations are gearing up for an online struggle. Enforcement is central to their strategy. Expect to see hordes of bedsit bloggers in the courts for copyright misdemeanours.

In the news market, Rupert Murdoch recently claimed that he could make a pay model work for online news but that "we'll be asserting our copyright at every point". I wish him well.

There is an irony that forward-thinking music industry players are finding some solutions. We're at a stage where attempts to bring all-you-can-eat digital services to music fans might just be about to pay off.

Why was it that Apple, a technology company, first capitalised on online music sales with iTunes? What finally persuaded record labels to allow for digital distribution of their products without cumbersome digital rights management restrictions? What drives the business models of music streaming services such as Spotify? Instead of consulting on the best way to criminalise seven million UK citizens, wouldn't it be better if we spent time asking these questions? We might have more chance of coming up with interventions that will nurture 21st-century creative talent, and not just restore 20th-century incumbents to their position of power.

Tom Watson is the former digital engagement minister and was Parliament's first blogger