Is Replay Music Really Legal?

Replay Music is 100% legal to use -- it falls in the same category as CD ripping programs like iTunes™, or using a VCR, cassette tape recorder, or TiVo™ Digital Video Recorder.

Will the RIAA sue me for using Replay Music?

The RIAA will not come after you as long as you record for your own personal use. File sharing services like Kazaa, Morpheus and the original Napster service put their users at risk, since redistributing copyrighted content or acquiring copyrighted content that you wouldn't otherwise have access to is illegal.
If you decide to share recordings with others, post them on the Internet, or sell them, do so at your own risk. This is definitely breaking the law.

What does the copyright law say in regard to Replay Music?

If you're really into the legal aspect of this, there are two important parts of the copyright law relating to recordings. We've quoted the actual text of the law below, and highlighted the important parts in red.
First, the basic right of copying is outlined in section 1008:

§ 1008. Prohibition on certain infringement actions
No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.

Next, comes the provisions of the Digital Millennium Copyright Act (DMCA). This is often used to stop distribution of certain copying programs. Replay Music operates by recording what comes out of the PC speakers, using capabilities built into Windows. We don't circumvent any copy protection systems, nor do we claim that Replay Music is designed to circumvent copy protection systems (which it isn't). The underlying technology behind Replay Music has been in use since at least 1999.

Below is the important part of the DMCA as it relates to copying and circumventing copy protection systems:

§ 1201. Circumvention of copyright protection systems2

(2) No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that —

(A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;

(B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or

(C) is marketed by that person or another acting in concert with that person with that person's knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.

(3) As used in this subsection —

(A) to “circumvent a technological measure” means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner; and

(B) a technological measure “effectively controls access to a work” if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work.

What's in store for the future of Digital Music?

Our hope for the future of music is that the record labels will find a way to make it easy and convenient for people to enjoy music in a reasonable, cost effective fashion.

We don't expect any big changes in the way music is distributed to happen anytime soon. So in the meantime, enjoy Replay Music as a way to discover new music, and be sure to support the artists by buying tracks or CDs of the songs you really like.