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that is NOT covered by fair use (regardless of whether you charge or not - the issue is unauthorized distribution). if you use someone else's music you need a license for distribution of that recording (artist/label) and that song (songwriter/publisher).
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But don't the people who are supplying the CDs have a license for their own personal use? You're basically saying that if I loan my CDs out to someone, have them make a mix for more, and give it all back, that that does not fall under fair use??