The pan-European licensing of digital music for the non-commercial consumer is a highly topical issue in copyright law at the present time. Whereas the EU continues to strive for the further harmonisation of the internal market, markets for digital services remain an exception, where barriers are artificially raised, rather than brought down. Yet why is harmonisation in this area so difficult to achieve? This thesis seeks to explain the reasons why creating a harmonised market for digital services is difficult to achieve by approaching the question in a multi-disciplinary way. It focuses not only on how the harmonisation of other aspects of copyright law have led to the development of laws which actually hinder the development of online services, but also on why copyright law has developed in such a restrictive manner, by focusing on the role of industry lobbyists and policy makers in the development of contemporary ‘digital’ copyright law. These findings are considered in light of economic analysis of the copyright system, in order to demonstrate why the continued increases in levels of protection and terms of duration of copyright are not only unsupported by economic evidence, but actually appear to hinder the development of new technologies and systems of distribution, making it increasingly difficult to create a single market for digital media distribution. Finally, this thesis will consider the role of collecting societies both online and offline, and how these institutions lead to a further fragmentation of a single market for digital media. While their existence in the physical monitoring of performances may be considered as a ‘necessary evil’, their existence in online distribution markets do not appear to be supported by either law or economic evidence. The thesis will therefore conclude by considering whether further changes to copyright law should be reconsidered in light of the negative impact that they may have on not only consumers, but creative artists themselves.