A friend just mailed me a link to Mercora who claim to provide a legitimate, legal and free P2P music sharing platform. Sound too good to be true if you ask me...
From their website:

The Legality of Webcasting with Mercora
Mercora lets you webcast music on the Internet using the Mercora client running on your PC and the Mercora servers located on the domain mercora.com. We have obtained a statutory license for the non-interactive webcasting of digital audio as per the
Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 114 (requires Adobe Acrobat plug-in). This license pertains to the digital performance rights of sound recordings and the associated reporting and royalty payments to SoundExchange® (the independent non-profit organization that represents over 500 record companies and associated labels). We have also obtained all U.S. (and in somecases international) musical composition performance rights through our licenses with ASCAP, BMI and SESAC .   These pertain to the performance rights and associated royalties due to song writers. We take care of all the reporting and royalty payments that are due to these various organizations. You (the end user) do not have to worry about any of this.

How it works
Once you have installed the Mercora client, you can tell the client about the digital music files you would like to include in your Mercora music library.  Once you do this, you can use the Mercora client to organize and play this music locally and also make the music available for webcasting to others on the Mercora Network. The Mercora client webcasts music that you play locally as well as automatically webcasts music when you are online.
In both these cases, it ensures that any webcasts you make satisfy various rules governing the statutory license for non-interactive webcasting, such as: conforming to the sound recording performance complement, minimum duration for looped programming, identification of song, artist, and album, etc. For this reason, in some cases you might be listening to one song while webcasting another.