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The European Parliament urged the European Commission on Tuesday to propose a law that would force the dismantling of the current method of distributing online copyright fees to Europe's songwriters and musicians.

The Commission also wants to change the fee-distribution regime to open up the market to greater competition. However, it has said it would be enough for collecting societies, which operate in each European country on behalf of artists and publishers, to reform the way they work online themselves.

But in a show of hands, rather than an actual vote count, at the plenary session of the European Parliament in Strasbourg on Tuesday a large majority of parliamentarians said this wasn't enough.

"I am not happy with the softer approach taken by the Commission in regulating this area, which is of growing economic importance," said Hungarian Socialist member of the European Parliament, Katalin Levai.

"It requires more than just soft law to open up this market. A binding legal instrument is needed," said Federico de Girolamo, a spokesman at the Parliament.

At the moment musicians and publishers must choose the collecting society in the country where they are based to handle the collection of the royalties generated from both online and offline music distribution.

These collecting societies collect royalties generated from around Europe on behalf of the artists in their countries. They argue that this form of co-operation is sufficient to create a properly functioning, competitive single market across the 27 countries in the EU.

The Commission has been examining the way collecting societies operate for many years. It stopped short of proposing a law to pry open the market because it said this might stifle progress in the fast evolving space.

"The Commission wishes to note that the online market is still only in a stage of development – we need to be especially careful not to limit its potential by adopting an overly inflexible approach," said Vladimir Spidla, the European commissioner for employment, who was standing in for Single Market Commissioner Charlie McCreevy at a meeting with members of the European Parliament on Monday.

Parliamentarians rejected Spidla's fears.

"We don't want unrestrained competition at any cost. We feel a law is needed to ensure competition, while at the same time guaranteeing cultural diversity around Europe and protecting the interests of smaller, lesser-known artists who might suffer if competition drove down royalties too far," said de Girolamo.

The Commission didn't rule out introducing a proposal for a law along the lines the Parliament is calling for. However, people close to Commission president Jose Mauel Barroso said the Commission – the EU's executive body – has no appetite for pursuing a law.

"Barroso has been approached by companies in the music industry who have urged him to avoid proposing a law," said one source close to the Commission who asked not to be named.

In a separate but related matter concerning copyright levies charged on blank CDs, photocopiers, printers and the like, Barroso last year ordered McCreevy to abandon a plan to harmonise rules across the EU after he was lobbied heavily both by copyright owners including record companies, and by the French government.

The Parliament stopped short of giving precise instructions to the Commission concerning an online copyright law. "It's not for us to dictate the content of the framework directive we want to see. That's for the Commission to do," de Girolamo said.

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