The letter of the law is making a mix and selling it is copyright infringement. Beatport does have that system now where you can make and sell mixes, but it’s only using tracks bought off BP…thus royalties get paid.
When I and many others sold mixes in the past, we did it illegally. I won’t lie or paint a pretty picture. We pressed up tapes (later CDs) and sold them in local shops that were off the RIAA radar. A big retailer wouldn’t touch those, but small shops would. We never were really busted because we didn’t make so many that it put any dent in the labels. Plus most dance labels at the time only made 12″ records…so there were no CD or cassette singles for average people to buy.
Now then, when Drama was busted, he was making a lot of money selling rap music mixtapes. At the time, rap was the cash cow for the big labels, thus they didn’t want anyone stealing their cash. It ended up that consumers were not buying the albums, singles, or legal compilations of their tunes…but instead these mixes. Drama was not paying any royalties, so it was stealing.
Now I don’t know if rap music mixes would be noticed as much as dance, since it seems the poppy dance sound is the cash cow for the industry. In all honesty, I don’t bother even trying to sell anything. I still think many (who at least are into what I’m into) would either download free sets from other DJs, or illegal sets from big names, or spend their money only on big names who make mixes. I’ve heard some more urban spots still sell them, but I can’t fathom a deep market anymore.