Pirate Bay co-founder Peter Sunde was rounded on in a debate designed to explore the future of music on and offline.

The Great Music Debate: The future of music consumption and its impact was attended by TechRadar and took place in London at The O2's British Music Experience this evening.

The panel was formed by the music industry and its observers – including Sunde, who left the controversial file-sharing site last year.

The debate's first 15 minutes could be easily summed up by "the CD isn't dead yet" but it wasn't too long before Sunde was asked for his views on the future of music distribution, provoking an immediately terse exchange.

"Most of the things we have been talking about are the record industry instead of the music industry. People here could sell diapers instead. Put this in perspective. Technology has come, it's a sort of evolution. The music industry is better than ever."

Vociferous in opposition to Sunde was the BPI's chief Geoff Taylor, who hit out: "You were convicted in a criminal court for your involvement [in The Pirate Bay]. It must be lovely to sit in your ivory tower, but...artists and labels deserve to be paid. It's morally wrong."

His comments got a round of applause – the audience was clearly record-industry focused and members of the front rows near us openly laughed at some of Sunde's comments.

Weak arguments

Unfortunately for Sunde, he was also undermined by some of his own weak arguments. "If you watch the studies by universities, bands make more money from touring and stuff by their music being spread. The record industry has a little interest in doing that."

Sunde argued that bands didn't need record companies and that independent artists weren't being hurt by sites like The Pirate Bay. "They don't need to be signed – they don't need a record company behind them anymore. You're selling a product, talking revenue streams...focusing on selling the rock star dream."

This argument was seized upon by the panel. "The truth is there's a lot of time and investment in artists. You [think you] pick on record companies and big stars? This goes down to the guy in his bedroom. You're hurting them. You think you live in a user-generated world? It's not true," said the head of EMI Music Publishing Guy Moot.

Debate

"Most artists want to be signed," asserted Taylor. "It takes huge interest to sustain themselves on live music. Then it's all about unsigned. I went and looked at the top 100 torrents on The Pirate Bay – [there was] Lady Gaga..it's all commercially released copyrighted music."

Taylor later told Sunde to "get real" saying that The Pirate Bay would "destroy national cultures" in a rather one-sided part of the debate. Taylor also talked about disincentivising P2P sharing networks and that "it would have been fantastic if we'd have had a working DRM-based model."

Taylor also later welcomed the Digital Economy Bill, saying the measures were "gradual and proportionate."

Sunde certainly had his moments, again referring to the industry as "selling diapers" and saying the CD should be banned for damage to the environment – which he was applauded for.

The real issues

The debate took place against the backdrop of a 7.2 per cent fall in music revenues reported by the IFPI (the international BPI). However, the BPI itself says the UK industry is in better shape, with revenues up slightly, bolstered by a near-50 per cent rise in digital income.

Paul Brindley of music industry site Music Ally argued that digital presented challenges they just had to overcome. "Digital has changed what we do. The value proposition of the album has changed..liberated single tracks. Not everything is down to the Pirate Bay and piracy alone. By making access to music so much easier...it is challenging to find business models."

Debate

Speaking about the future of the industry in general, the BPI's Taylor said: "I'm reasonably optimistic, but it has to be put in perspective. But CD albums were still down in value.

"The big frustration is that there's so much music being consumed – the CD is still a fantastic product great value, even better than the download. [But revenues are] a fraction of what they should be because of things like The Pirate Bay. There's a role to play for ISPs as well as well as anti-piracy" - their involvement in anti-piracy measures.

Stephen Somerville of download site 7Digital said that a combination of revenue streams would be the future of digital music.

"It's difficult to predict to that regard. I agree with a blend of different approaches to product. Betting on one of those models being the future is a bit of a false game."

The panellists seemed in general agreement that a mix of subscription, single download and ad-funded models would be the future of digital music.

Spotify and other ad-funded models

"The Spotify upgrade looks very encouraging," added Music Ally's Brindley. Referring to the We7 announcement that the site is now covering the cost of its rights from the ads it sells, he said: "That gives more hope for the ad-funded model. It's a bit of a disappointment that we've not seen the much-vaunted [subscription] service from Virgin. "

"[Nokia's] Comes with Music didn't really take off in the way we might have hoped, but I think there's more potential for this idea of bundling music, using music as a value-add," he added.

Sunde had earlier said that "Spotify uses the same technology that The Pirate Bay used...also a torrent client - they got beaten up really badly" when the site was held up as a good example of legal streaming.

David Stopps of the MMF (Music Managers Forum) made most sense in bridging the divide between the panellists. "Peter is very brave to come here today. The legal model has to compete with Pirate Bay and provide a service to match Pirate Bay.

"You can compete with free. Take the water industry – [water is free] but people still buy bottles of water."

"We've got to create more legal models that compete with Pirate Bay," he concluded.