Consumers must be given clear information on exactly what they can and can't do with music and movies purchased online.
This is the view of the All-Party Parliamentary Internet Group (APIG), a group of MPs who have been looking at the issue of copyright protection - or digital rights management (DRM).
APIG said the Office of Fair Trading should introduce labelling regulations. It said these should clearly spell out any restrictions consumers may face.
The report comes after APIG held a public enquiry into the problems both consumers and copyright holders face concerning DRM. It sought views from industry groups, consumers and media makers.
It acknowledged that generally, British consumers don't know that under British copyright law there is no such thing as fair use. This means when someone buys a CD, they are infringing copyright even by recording it to their computer or portable music player.
A YouGov survey for the National Consumer Council this year found just 19 per cent of people were aware of this fact. It found that 55 per cent of consumers copy their CDs to other devices, with three in five Britons thinking that copying for personal use is legal.
Other countries â€“ including the US and most of the EU â€“ provide a right to reproduce copyrighted material for private use. The consumer group wants to see a fair use clause inserted in the country's "absurd" copyright laws.
APIG said that companies that used aggressive DRM systems should realise they "run a significant risk of being prosecuted for criminal actions" for potentially breaking the Computer Misuse and the Data Protection acts.
This warning followed the disastrous attempt by Sony BMG to introduce a form of DRM onto its CDs sold in the US that potentially left users PCs at risk from hackers. Sony eventually had to settle the matter in court with disgruntled US consumers.
The MPs are also unhappy with the pricing of digital media. They have called on the Department of Trade and Industry to look into the prices charged for the same digital content, such as music tracks, in different countries.
For example, in the UK consumers can pay significantly more for songs from Apple's iTunes store than customers in mainland Europe. "This is somewhat at odds with the notion of the 'single market'," noted the report.
The report has generally been welcomed by consumer organisations. However, the Open Rights Group cautioned that there is still more that could be done. It said APIG had "missed an opportunity to look more closely at interoperability and open standards for digital content and the hardware that content is played on".
I realy hope this is taken up and finally we can actual make a back up or transfer music to MP3 players etc without breaking the law, in the UK. It my also help judging by it if the recommendations about the cost of music services is delt with too for those that use hem.