I would like to know how legal this is, or where I can find information on how legal or illegal this is.
I came up with a way for users to upload music to my website so that the rest of the users can listen to it. Will this be O-K as long as the music was legally purchased, and users are not able to download music from my site. It would be strictly uploading and listening.
what about the websites that have 'radio stations' where they play continuous music? I could do something like that right? Or is there a legal issue that I have to deal with there?
Well, if you want to buy rights to re-broadcast the songs, like those radio stations do, then it's perfectly legal. On the other hand, you can record the music yourself, ie get some drums and a guitar.
I'm pretty sure they have to have the permission of the record labels to play their music, and probably pay royalties or something...
I don't know about the radio stations.
Years ago we had to buy a license, ASCAP I think, in order to play broadcast radio music in a public business. It was 2 or 3 hundred per physical location.