Metchosin,

If you make and distribute copies of copyrighted materiel you have to pay royalties for it whether you make money on the endeavor or not. Under the law, the issue isn't whether you made money, its whether you made copies. Just like if you rob somebody at gunpoint, it doesn't matter if you don't get anything from them. Similarly, if you don't collect money, and don't pay the required royalties, it doesn't matter, you still owe the money.