I also want to know the answer to this question; ie if music can be heard but not downloaded (like in a swf player) is it legal?..

I know a few big sites that let you listen to the song but not download it, so I am guessing that it is legal. They use asf/asx format...

Those sites pay a streaming license to the music publishers.

Same as radio stations...

I say be very, very careful...

Sure there are sites out there that allow you to listen to songs for free... but what you don't know... is whether or not these sites are cutting a check to the music publishers for use.

Would this not be the same as allowing someone to watch any movie they want via your website? Imagine how fast that operation would get shut down.

Edit: Damnit jberryhill, lol, beat me to the punch...

Assume all music is copyrighted.

In order to use that music, especially for commerce, except in limited "fair use" circumstances, you need the permission of the copyright owner. Usually this means a license. And that means a fee to the licensor...

If you make it possible for people to hear the music via your site, you need the permission of the copyright holder...

Exactly...the music industry so far has not cracked the whip against webmasters but I expect one day it shall. I believe your site would be targetted for a C&D rather fast. There is little point in pushing your site since the more popular it gets the more likely it will be shut down...

No close it down.

Your site breaks every copyright law on the planet.

I suggest you do some reading up on copyright and publishing laws...