The music industry has applauded the Isle of Man after its government announced it would be imposing a blanket tax on broadband subscriptions, allowing unlimited broadband music downloads for free.

Government officials from the island, populated by 80,000 people, have been in discussions with four record companies over the deal.

Ron Berry, the Isle of Man government's inward investment manager, said that the system was the best feasible long-term solution to the illegal downloads problem which is threatening to cripple the music industry.

"At the end of the day, we are not going to stop piracy, so let's embrace it," he said.

While British Phonographic Industry chief executive Geoff Taylor urged internet providers to sit up and take notice.

He concluded: "If ISPs take the position advocated in the Isle of Man, we'd be in an enormously better position."