What's the real deal with music licensing?

if your selling to under 500, which you probably are, it isnt an issue, over that anyone notices your fucked for liability and licensing

right, but even if under 500 there's still a small chance that someone will catch wind of it, and might want to make you an example and sue your ass. It's all a gamble..

your movie could just have an original soundtrack i suppose....

if your good at that stuff it would be best, it would have super good flow

If you're not selling it nobody cares, there are tons of videos on the internet not using a licensed soundtrack and they don't get sued. If you're selling lots of copies you should but if you're selling to your friends you're fine.

Use small label or independent artists. You can usually just email them or write them a letter and they will be cool with you using their songs for free. Go find some good artists on myspace or where ever and you'll be just fine.

Technically, if you are copying, editing, synching, exhibiting, distributing, reproducing the music not for your own personal use, you are breaking the law and open to prosecution. Realistically, if you're making a small video, no one's likely to notice. They're too busy suing the pants off of file sharing websites. That said, I have heard of cases where people have received cease and desist letters.

How do you be 'legit'? You need three licenses--mechanical reproduction license,
synching license, master use license. And then you have to make sure that each of those specifically covers the way in which you will be using the music. For example, some licenses allow you to make DVDs, but not publish on the internet.

Don't have a lawyer? You can download some releases here:
http://www.current.tv/make/resources

Obviously, you'd need to rework them for your own company and purposes.

Hope that helps.

Are you a Lawyer by any chance?