don't get me wrong, i'm no saint too with streaming my music, but it's as illegal as it can be of course, everybody who streams music for others to enjoy has to pay royalties.
When doing it correctly i would have to pay around 317 euro a year for he royalties, or a certain amount per user per song and time listened, and around 577 euro for broadcastingrights (not the stream itself just the right to put it on the internet). And of course use legally owned music, downloads from torrents and newsgroups... well i don't have to tell thats not the most legal way to get your songs
Don't think they will announce it when they'r going to hunt some wild streams, they can scan the internet for keys that are baked into the songs, if they find you you wont have to tell what you broadcasted, they know it up to the second, and present you the bill....
The broadcasting in SL isn't a huge priority for them, yet, relatively there are to few people to make it worth the hunt. Thats the only reason it's been quite safe.