When an Avatar hears your music mix at a venue in Second Life, they are actually just listening to your personal Internet Radio station. The SL Viewer software is simply acting as an Internet Radio (stream) player. If the person knows your unique station URL they can listen directly in most music software. Music players that will work are RealPlayer, Windows Media Player, Apple iTunes, Musicmatch Jukebox etc.
Now that you understand you a running an internet radio station, you need to be aware of music licencing obligations. In Australia, we are referred to as “Narrowcasters”. Narrowcast services are broadcasting services whose reception is limited by some means (eg they have a limited appeal, they target special interest groups, or they are only able to be received in a limited location or for a limited period of time). Some narrowcast services can be received on standard radio sets; others require special receiving equipment. These services are generally funded by advertising or subscription fees.
More licence information can be found at the APRA website.