I am not a lawyer™ but the creators should definitely consult one to 1) determine how much risk they are exposing themselves to and 2) determine a reasonable co

I am not a lawyer™ but the creators should definitely consult one to 1) determine how much risk they are exposing themselves to and 2) determine a reasonable course of action to limit that risk exposure. The question is not on whether or not we believe something to be "legal" or "illegal" but whether or not some part of their service might draw the attention of a group large and angry enough that might try to make them prove something in front of a judge. This is the real danger to a small group of developers: the RIAA has many lawyers on retainer while the upfront cost of dealing with a lawsuit would bankrupt most individual developers.