Andy Hill at Broadchart, which tracks down illegal downloaders in the UK, applies a simple rule when it comes to working out whether royalty payments need to be made. It all revolves around the "substitution principle": "If the action someone takes results in that person not having to buy a CD, then a substitution has taken place and therefore a royalty must be paid. If a CD has not been bought, the artist, composer, producer, record company and music publisher won't have been paid. This is why anyone going to an illegal music site and downloading a recording (for whatever purpose) is breaking the law."
l For more on copyright see the British Music Rights learning pack for schools www.bmr.org
The Pro-Music campaign also has a handy FAQ copyright page at www.pro-music.orgcopyrightfaq.htm