Record executives do not view LidRock as a panacea for the difficulties - like the illegal sharing of music online - that beset the industry.

Today, however, prices of CD's are, if anything, falling, while illegal sharing of music on the Internet has made an alarming dent in music sales.

The system uses cryptography extensively to place barriers against illegal sharing of copyrighted material, the kind of trading that got the Napster music-swapping service into legal trouble.

Denmark has sent "civil demand" letters to 120 people, ordering them to stop illegal sharing of files and to pay compensation, or face legal action.

While such networks have been associated largely with the illegal sharing of copyrighted music and movies, the sharing of pornography has also been a popular use for file sharing.

For example, if implemented, these filters could prevent the illegal sharing of music over social networking platforms.

Yet illegal sharing of software is a rapidly growing phenomenon and a widely accepted practice by the millions of people who use personal computers at work, at school, or in their homes.

While illegal sharing of music over the Internet had been popular for a number of years the music industry started creating new, pay-per-download services, which were very well received.

Thus, the mainstream music industry attempts to maximize their revenue through deterring illegal sharing of music.

"The Internet has taken off since 2001, and there is now the very real threat posed by illegal sharing of music online," another person close to the companies said.