You have to pay royalties. As long as you own media that pays royalties you are OK. Manufacturers of R2R tape pay tiny amount for each foot of the tape. Same goes for digital tape or Audio CD-R. Technically you could copy your friend's CD into Audio CD-R and you will be OK since royalties are paid. It is all assuming personal use. Exact explanation is on the RIAA website:
Copying CDs
- It’s okay to copy music onto special Audio CD-R’s, mini-discs, and digital tapes (because royalties have been paid on them) – but not for commercial purposes.
- Beyond that, there’s no legal “right” to copy the copyrighted music on a CD onto a CD-R. However, burning a copy of CD onto a CD-R, or transferring a copy onto your computer hard drive or your portable music player, won’t usually raise concerns so long as:
- The copy is made from an authorized original CD that you legitimately own
- The copy is just for your personal use. It’s not a personal use – in fact, it’s illegal – to give away the copy or lend it to others for copying.
- The owners of copyrighted music have the right to use protection technology to allow or prevent copying.
- Remember, it’s never okay to sell or make commercial use of a copy that you make.