How do you know if the copyright claimant or owner of them material you are using is allowing their content on Youtube?
... does fair use automatically cover you for anything related to this?
Is it illegal to share the music experience of a legally purchased MP3 ... or to provide services that play songs ... but are not hosted by your website (in which case you just act as a pointer to other sites which are participating in illegal activities)?
What rights/privileges can cover you if you wish to participate in this?
I've heard (rumours probably with no legal standing), that as long as you are not monetizing their material, you will not have any legal action taken against you.
You probably won't have action taken against you. That said, you probably won't get busted for smoking weed in your basement. Lack of enforcement makes it no less illegal.
Copyright is a legal right created by the law of a country that grants the creator of an original work exclusive rights to its use and distribution, usually for a limited time. The exclusive rights are not absolute; they are limited by limitations and exceptions to copyright law, including fair use.
The copyright holder decides how, when and by whom their work can be used and copied. At some point this right expires and the work passes into the public domain. It is not trivial to determine what works are public domain and what are not as it depends on the copyright law in the country they were created in at the time of creation and how that law has changed subsequently. In most of the world, the default length of copyright is currently the life of the author plus either 50 or 70 years. Many jurisdictions also grant workers for hire moral copyright in their creative work even when the proprietorial copyright vests with their employer.
Copyright comes into existence automatically; it doesn't need to be registered or denoted in any way. For example, I have copyright in this answer and you have copyright in your question. A few countries (the USA among them) have a copyright register but that only limits the remedies an unregistered copyright holder has; failing to register does not negate copyright.
Further, a single work can have multiple copyright holders: a music video for example has (barring contractual arrangements):
- the composer(s) holds copyright in the music
- the lyricist(s) holds copyright in the lyrics
- the performer(s) hold copyright in the music performance
- the actor(s) (if any) holds copyright in the acting
- the producer(s)/director(s) holds copyright in the finished product.
In practice, most of these people have contracts which give their copyright to someone else.
Almost certainly, every MP3 of every song is covered by copyright; that is, someone, somewhere owns the copyright; that is at least one someone. How can you tell who that is? Often, in the absence of a claim of copyright, you can't. Obviously, if it is a song published by a record label than its pretty obvious that they hold copyright on it and you don't need to worry about the deals they have with the artist/composer etc.
Remember, copyright violations are a civil matter; the state does not get involved. It is up to each individual copyright holder to take whatever action they wish under the law to protect their rights.