Perhaps this idea is already out there in some format, but not so widespread that I have seen it: Amazon or another such site selling custom-made CDs where you can pick, for example, ten songs and have them burned on a high quality CD. That way you can pick the songs you want from a library of legally available music and everybody is happy from musician to CD manufacturer to retailer to customer. This would cost more than a regular CD probably, but I think there are consumers who would pay for this service.
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I remember hearing this idea a number of times as a "Business Opportunity" during the Internet Bubble years. Apple's iTunes has leap-frogged this idea by going completely digital. Of course it does nothing for those of us who don't feel like forking over the cash for an iPod. Plus I'm not sure you can burn your iTunes to CD.
I belive you can use I-tunes without an I-pod. You can burn the tracks to CD for sure.
I ripped all my CD's onto my computer. And put them on my external hard disk, so I can easily move them. If I wanted them on a CD, I could burn one. But assume that I resent the greedy music companies that make me buy an album to get the one song I want. Then I might borrow a CD from a friend or get one from the public library. There are several sites for downloading legal music files. Try download.com or the site of the artist. Or keep Googling.