Communications minister Ed Vaizey has introduced secondary legislation to enforce anti-piracy plans in the Digital Economy Bill.
The Sharing of Costs Order covers the cost of letters sent to those suspected of piracy, as well as prosecution and appeal costs. These will be split between media rights holders and internet service providers at 75/25 per cent respectively.
"The Digital Economy Act sets out to protect our creative economy from online copyright infringement, which the industry estimates costs £400m a year," Vaizey said in a statement.
"We are introducing a system of mass notification to warn people about the unlawfulness of copyright infringement, explain the harm it does and point them toward legitimate content.
"These measures are expected to benefit the industry by around £200m a year and, as rights holders will be the main beneficiaries, we believe our decision on costs is fair to everyone."
One of the provisions covers the cost of appeals against allegations of piracy. The government has said that all appeals must be free to end users, but that it reserves the right to impose a small charge if the numbers get out of hand.
The government's moves to curb piracy were praised by the International Federation of the Phonographic Industry (IFPI) in its Digital Music Report 2011 (PDF).
IFPI chief executive Frances Moore said that governments could turn the tide against piracy in 2011.
"Tackling digital piracy is ultimately a task for governments. Are they prepared to stand by and allow an internet where normal laws and values do not apply? There were encouraging signs in 2010 that the tide of government opinion is turning," she said.
Moore claimed that one million creative professional jobs could be lost in Europe by 2015 unless piracy is addressed. The IFPI report was supported by artists including Ricky Martin, Susan Boyle and Enrique Iglesias.
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