Heads of universities will face criminal sanctions if they collude in the illegal downloading of music files — “copyright theft” — that is costing the music industry £2 billion a year.

The industry believes that universities, which offer students unlimited access to computers, are producing a generation of fans who believe that music is a commodity available free of charge. Websites such as kazaa and grokster allow internet users to download digital copies of the latest hits and produce their own compilation CDs for nothing.

Universities countered that it was not their job to police the internet on behalf of a record industry that is suffering a slump in CD sales.

Every university in Britain will today receive a letter from the British Phonographic Industry and its sister organisation, the International Federation of the Phonographic Industry, reminding them that unlicensed internet copying is a breach of legislation. The federation quotes studies conducted at universities showing that 50 to 100 per cent of the institutions’ internet capability had been taken over by illegal file-sharing traffic.

Academic institutions now face legal action. The federation said: “The legal risks include injunctions, damages, costs and possible criminal sanctions against the institutions and their heads where systems are used for copyright theft.” It was in the interest of academic institutions to crack down on illegal copying.

A spokesman said: “It clogs up universities’ computers and internet bandwidth, impairing the legitimate academic pursuits of staff and students. It also exposes academic systems to viruses.” Permitting illegal file-sharing “sends the wrong message to students, who are expected to avoid plagiarism in their academic work and otherwise obey the law”.

The first university internet prosecution has been instigated in Australia. Earlier this month Sony, EMI and Universal launched a legal action against the universities of Melbourne, Sydney and Tasmania over suspicions that students were breaching copyright by downloading music onto campus computers.

The British Phonographic Industry said that the aim in Britain was not to threaten universities but to give them advice on “filtering” software which institutions could introduce to block internet copying.

The Universities and Colleges Information Systems Association said that the music industry should help to pay the cost of protecting its own products. Martin Price, its executive secretary, said: “The music industry could contribute financially to the administrative burden of introducing software to block downloading.”

The Association of University Teachers said: “We don’t condone students downloading material in breach of copyright. Computers should be used for academic purposes. But we would not support any university that told staff to start snooping on students. Staff have more important things to do, like teaching.”

Universities UK, the body that represents vice-chancellors, who are vulnerable to prosecution, said: “UK universities are aware of this issue, have proper use guidelines in place and make proper use a condition of student use of university equipment.”

British universities are being urged to follow the path of their American counterparts, which are taking draconian measures to avoid prosecutions. In November, the US Naval Academy confiscated the computers of nearly 100 students suspected of having downloaded unauthorised copies of music and films. The midshipmen, who are bound by an ethics code that bars cheating and stealing, were threatened with court martial and expulsion.

One student at a California college tripped an “electronic alarm” at Warner Bros when he downloaded a Clint Eastwood film. The company threatened to prosecute the college and the student had to write a letter of apology to Warner Bros as punishment.

By targeting universities, the music industry is bearing down on the source of some of its greatest talent. Coldplay, Britain’s top-selling rock group, met at University College London, an undergraduate route to fame followed by many artists.

Universities face similar penalties to companies which permit a breach of internet copyright. Last April, the Arizona-based Integrated Information Systems Inc paid $1 million (£640,000) in a settlement after employees were found to be accessing and distributing thousands of copyright-infringing music files on the company server.

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