this is an interesting topic, I've been working on a few things with harry fox and here are some excerpts from their site
mechanical licenses
If you are manufacturing and distributing copies of a song which you did not write, and you have not already reached an agreement with the song's publisher, you need to obtain a mechanical license. This is required under U.S. Copyright Law, regardless of whether or not you are selling the copies that you made.
digital licensing
I am not charging anyone to access these songs on my website. Do they still have to be licensed?
Yes, it is required under U.S. Copyright Law. This is how the publisher - and ultimately the songwriter - gets compensated for the use of their song.
then they follow up with a peer to peer definition that says this
Peer to Peer (P2P)
Also referred to as file sharing, peer-to-peer is a popular type of application in which, rather than accessing files from a central server, users access a common network hub and open up portions of their own computer's hard drive to the public for downloading. Any unlicensed P2P activity is illegal and can result in criminal prosecution and/or fines.
I'm sure there is some loophole or special provision, but I just have to wonder how lma allows streams and downloads of bands playing cover songs without obtaining the proper licenses? I can understand his point, I've wondered about it as well. Another big grey area