The MP3 technology iteself is legal, and you are free to download, copy and trade authorized MP3s.
Authorized means that the MP3 files have been approved for distribution by the artist who created them. Also you are free to make your own MP3 copies from your own collection of CDs. You can even copy those MP3 songs into another CD using your computer’s CD-RW drive, as long as you don’t give away or sell the copy you’ve made.
However if any time you make unauthorized copies and give them away, sell them, or post them on a web site, you’re breaking the law.
(Source: MP3 for Dummies, Andy Rathbone 2001)