Bragg is one of the main figures in a new performers' pressure group, the Featured Artists' Coalition (FAC). In an article in The Guardian newspaper Bragg says that labels must stop punishing music fans and create a viable online music service.
Bragg said that the labels' reluctance to use legal action against downloaders shows that it has given up on using copyright law to protect its copyrights. Bragg said that the chairman of the record label body the British Phonographic Industry (BPI) had recently said that a 'write and sue' policy would be ineffective.
"Stating that a 'write and sue' policy will not work is an admission that the current copyright law is no longer fit for purpose in a digital age," said Bragg. "The government has pointed out to the BPI that if it wants to crack down on unauthorised file-sharing, the law is already on its side."
The recording industry, though, wants ISPs to take action, disconnecting users it accuses of breaking copyright law.
Bragg said that the industry is simply evading its responsibility.
"Fearful of the prospect of dragging their customers though the courts, with all the attendant costs and bad publicity, members of the record industry have come up with a simple, cost-free solution to their problem: get the ISPs to do their dirty work for them," he said. "This is a shameful attempt to pass responsibility on to another sector of industry."
The FAC emerged this year as a direct voice for artists who have often felt that record label bodies such as the BPI and its international counterpart the IFPI (International Federation of Phonographic Industries) represent the business interest of the labels and not the commercial and artistic interests of performers themselves.
"Not for the first time, we at the Featured Artist Coalition are forced to question whether the record industry is representing the best interests of artists in calling for such measures," he said. "As recording artists we question the wisdom of pursuing and penalising our potential audience."
Bragg said that the industry bodies were simply trying to cover up for the fact that they had not yet worked out how to capitalise on music fans' interest.
"The next generation of music fans may no longer want to pay for music, but they are still hungry to hear it. The challenge to the industry is to find ways to monetise their behaviour," he said. "The question is, are the major labels too wedded to their old business model to be capable of leading the next generation? It is all very well to claim that they have already transformed their business models online. Evidence suggests otherwise."
"Some form of P2P [peer to peer] subscription service is the way forward, if only because it provides the most convenient way for consumers to access music," he said. "Yet for the major labels, the success of such an initiative would mean the end of their control over the distribution of music. Is this the real reason why they seem determined to do everything they can to clip the wings of the fledgling digital industry before it can fly?"
The FAC has formulated a set of policies which differ from those of the record industry bodies.
"Artists should retain ultimate ownership of their music," says its 'charter for fair play'. "Rights holders should have a fiduciary duty of care to the originator of those rights and must always explain how any agreement may affect how their work is exploited."
The body recently called for the copyright in sound recordings to be extended beyond 50 years, but said that the copyrights should pass from record labels to artists after those 50 years have passed.