Music on Profiles

I am developing a site similar to respectance.com for a client and he is adamant about wanting users to be able to upload background music for a memorial. I've expressed my concerns, regarding the legality of it all (posting of copyrighted material) and he really wants to give users this feature.

What are the legal ways to go about this - I have no experience in copyright issues, not a lawyer, but just giving him some generic "from a nerd who reads the news" advise.

Some options I've considered: - Registering as an online radio station and paying the fee per song play (strongest, legally, I think). - Displaying a message to users telling them to only upload music they have rights to and that they are responsible for music posted (weakest) - Forcing my client to move to Switzerland and take his server with him (medium)

Anyone have any thoughts? How do companies get around this very touchy subject? I'm sure MySpace has deals with all of the industry but what about the smaller sites, like Respectance. Where does the line of Fair Use begin/end?