When does all this apply? When you are actually making money?
Under US copyright law, at least, the question of selling, giving, price, and profit does not arise. If one uses another's copyrighted material to create a book, CD, DVD, etc., just to give it away, never intending to sell it, he is still using the (possibly) copyrighted intellectual property of the author/composer or his assigns, and those people are entitled to reimbursement.
It is true, of course, that it's possible that those who own the copyright don't care, or don't know their rights, or that they can't identify the use of their property in the blinding buzz of the market, or can't locate the infringer, and the infringer may never be caught or charged or punished. But that doesn't change the actual rights and wrongs of the situation.