The failure of the current music copyright system is not due to a lack of an effective response to illegal music downloading, but the challenge is that both music industries and internet industries stick to their own business models and try to counteract each other by their own law-based and institutional controls, so that they can keep or make profits in the ways they know best. This behaviour prevents them from coming to an agreement on the direction of the music copyright reform, and music industries still have no effective legal methods to combat illegal downloading online. This research is trying to find a way to fix music copyright, in order to make sure copyright owners, especially lyricists, composers and producers can earn a living from their creations. The main part of the research focuses on two issues. The first one aims at remedying the connection between copyright owners and commercial users, such as broadcasters, airline companies and shopping malls. The problem here is that the licensing costs are much higher than tort costs in China. In this respect, a modern collective license system is needed to be introduced from Europe and the U.S.A. An efficient CMO should be truly approved, controlled or established by copyright owners themselves, not by the government or unrelated third parties. That is the basis of a genuine music market. The second issue aims at remedying the connection between copyright owners and online users. The reason that the music industry is unable to adapt to digitization is that they always want to directly control all acts of reproduction and distribution. But in the internet, nobody can actually control the sharing. What we need here is to focus on regulating ISPs, not end users. We should establish a unified licensing platform, which can provide a one stop license entity for the ISPs, and let ISPs deal with end users by providing more released digital music services.