Hmmm...
I had a site for free mp3s which never got off the ground. Every artist I contacted was excited by the idea of spreading their work (selected, full hi-quality mp3s) further. Now of course, they were exclusively punk and indie (read: independant) bands, most of whom are very liberal and not so hung up on chasing the big $s anyway...
I've burnt a CDs of free mp3s and songs from label samplers in the past for friends of bands I know there's virtually no way of them hearing otherwise. (Californians exploring the Exeter underground? I think not :-)). I honestly don't see how anyone could find that a problem.