The record companies are once again crying over spilt milk. When they experienced a windfall from the compact disc in the Eighties, instead of giving back the love, the industry made the customer feel guilty with its “home taping is killing music” campaign.

Now it is trying to stop illegal downloads by brokering a deal with internet service providers to reduce internet speeds for transgressors. But the £1 billion that the industry estimates it will lose in the next five years due to file sharing is already long gone. The game changed years ago, and a generation has grown up believing that it doesn't have to pay to hear music. It's hard to see why even younger fans would feel different.

The BPI, the industry's trade association, has spoken of a “richer, legal music downloading experience” on the way, which is like a power company promising a more fulfilling electrical connection. EMI is like Vickers and CD production is like shipbuilding - the old model is crumbling. A small label could issue, say, an old Manfred Mann album licensed from Universal for about a sixth of what it would cost Universal itself to put it out. The infrastructure of these companies is labyrinthine and outmoded; trying to cover their overheads with threatening letters and guilt trips won't stop that.

The long-term prospects are bleaker still - new technology has made music a cottage industry. It is so cheap to get recorded music to the audience that artists no longer need a major label. The industry has been in a similar quandary before; rock'n'roll and, later, punk created an opportunity for DIY labels, run out of bedrooms and shacks, to tear huge chunks out of the lethargic, lumbering majors. The present problem, however, is more long-term.

The power of the majors has always been in their ability to get product to the public, and they had a near-monopoly on it for decades; when the great producer Joe Meek started his Triumph label in 1960, he was closed almost immediately by lack of co-operation from distributors. In 2008, pop is bottom up, not top down. Word of mouth is all you need.

MySpace is the cleanest form of musical distribution - anyone with talent, which has always been roughly 1 per cent of the pop world, will get noticed there and build up a fanbase. The next step for an aspiring act is to sell their music at gigs, on CD (very cheap) or vinyl, which has the air of exclusivity. Live music, if the act takes off, is now where most of the money is. Leonard Cohen can sort out his pension problems and pay off his debts with a world tour.

Buying a download is like buying air - there is no sense of buying something real - so no wonder that people don't think they are doing anything wrong. A show can last for ever as a memory; even putting money in a jukebox can soundtrack three minutes of your life.

I have thousands of 45s and LPs at home, and nine times out of ten I could tell you when and where I bought each one. As a kid, buying a single from Rhythm Records in Redhill was an experience - if they didn't have it I would hunt it down; that was all part of an experience.

Who could say the same of downloads? To suggest that a “richer” way of buying music is just around the corner is to be in denial. A threatening letter will doubtless deter some people, but I'll bet that 6.4 million of the 6.5 million Britons who downloaded illegally last year are under 25: for them downloading systems such as LimeWire and Bit Torrent will become as obsolete as Napster, supplanted by more secretive ones. These people are not holding out for a richer experience.

The answer is to give downloads away, or to make them cost no more than sending a text. Music is for sharing - that's why I started a fanzine 20-odd years ago. Some labels have cottoned on to this - Matador, once home to Cat Power, provides a free download when you buy vinyl copies of its records. But vinyl sells on a tiny scale compared with CDs and downloads - this is no business plan for EMI, which has now lost the Rolling Stones from its roster.

EMI seem to believe its future lies in the past. Its catalogue department has stayed pretty much untouched by lay-offs. It is probably not a coincidence that Paul McCartney and Cliff Richard, both EMI artists for most of their careers, are once more going to the European courts to try to overturn the 50-year copyright law that means that, at present, their earliest recordings will soon become public domain. This time, they may win.

This crackdown smacks of desperation. A few weeks ago Charles Dunstone, of TalkTalk, the internet service provider owned by Carphone Warehouse, said that he could not “foresee any circumstances in which we would voluntarily disconnect a customer's account on the basis of a third party alleging a wrongdoing”.

Threatening your customers isn't a smart move. People will continue to talk among each other, sing and swap their favourite songs as they have done for hundreds of years, and that will undermine the heavy-handed tactics of the BPI no matter how hard it frowns back.

Bob Stanley is a member of the band St Etienne

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