@Doobah47,
So if what I gather is correct, you support the fact that the Record label acts as an agent for a "live gig" which I am assuming is the artist, band, etc. The users then upload the mp3 song (owned by the label). But are you implying that the user is entitled to promotional costs for uploading the song?
Legally speaking, the property rights pertaining to music and intellectual property centers around copyrights. In a copyright, the right of the writer (i.e. artist, originator) has automatic and exclusive rights to their work for a given amount of time. The copyright extends for 70 years after the originator dies, 95 years for the publisher from publication, or 120 years after creation of the original work. During that time, the originator (i.e. the artist, publisher) can file for actual damages
plus profits received from the infringing party
or statutory damages under the Copyright Act of 1976
plus costs.
So, legally speaking, if somebody did upload a song, edit it, and then sell the song privately, they are violating copyright laws. They are taking a registered concept of somebody else and changing it to suit the and profit by it. Of course, the burden is on the producer to show how it is directly related to the song made by the person who may have copied it. But this is why we have royalties. Royalties allow the copying person to pay for the right to change the song made by the original producer and still satisfy both parties.
However, and legally speaking, there is always a loop hole to everything. In certain respects, a person could reproduce the song and not pay royalties. There is a "fair use" exception law embedded in the Copyright Act of 1976?namely section 107. This section states that a work can be reproduced for criticism, comment, news, reporting, scholarship, research. The reproduced work must be above all non-profit. So in answer to your second question, no, a person could not sell a song which was altered and resold because of the fact that it was altered without royalty and sold for profit.
Philosophically, songs much like art are in my opinion subjective rather than objective. It requires the opinion of others to be considered in any respect. Conversely, a song requires origination and credit as much as it needs the aesthetic qualities that make it what it is? art (or a song). Also, if you were a millionaire and bought a Botticelli? and then found out it was not the real thing? would you not be immensely pissed? This is actually a big problem in the art world, where some painters actually reclaim old canvases and use old paint pigments to reproduce a painting and sell as an original.