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Cover Songs, worth the trouble?

I would like to know, or actually I'd like to just hear others' "take" on the issue.. of recording other peoples tunes, or copyrighted material like Wold Horses or BrownSugar but any, not just stones. and what it'd be involving at the lower or home studio-level..produced mp3's or whatever to offer from a website dedicated to self promotion.

Royalties for free downloads of cover songs

I was wondering if anyone had any experience with posting free downloads of demos on their websites that are cover songs.

My group is working on a demo CD of jazz and latin standards. Since we will not be selling this particular CD, only giving it away as a sample of us - what are the copyright issues?