The 22-year-old, who released new album Colour Me Free on Monday, insisted that real artists should accept that music will be downloaded and make their money from touring instead.
"She needs to sell records because she's not a singer, and that's not an offence to her because I think that she knows that too," she told The Mirror.
"I think she's a performer and she's more of a personality than she is a singer. But I think when musicians are really making real music people come to the show and that's what we make our money from, from playing live.
"I think it's probably harder for an artist like Lily and any other pop acts. It's really about the track and about their personality and their celebrity and that's how they make their money is selling those records.
"So the downloads - she's not going to win that fight. None of us will win that fight. So let's just accept it and let's see it as something that can be beautiful and it might change music for the better. It might sort the weeds from the flowers."
Allen was backed by artists and songwriters including Guy Chambers, James Allan, Mika and Frankmusik in her call for more action to stop illegal file sharing.
> Lily Allen 'passes on piracy baton'