Sycraft
There is a lot of confusion about that since there are free mp3 encoders, and h.264 encoders and so on. What people don't realize is that while the software itself can be freely distributed basically for academic purposes and such but if you use them to actually make and distribute stuff you are legally required to pay a license.
I do not think educational purposes is at all relevant to the claim that MP3 software can be freely distributed. The MP3 encoding process itself is covered by some reasonably broad patents. Unlike a copyright that protects the actual expression of the work, a patent protects the idea behind the process or device, and variations or applications that use that protected process are infringements. The shaky argument that LAME (Lame Ain't an MP3 Encoder) distribution depends on is the distinction between creating a protected device, and having a blueprint or method to create such a device. I can own or write and distribute a plan (subject to copyright) that will allow you to build a widget. In fact the whole idea of patent registration is to disclose that information in sufficient detail to allow someone to build your device, or how would they know they were infringing in the first place. Things change, however, if I take the same plan and construct a device that uses the underlying concept. In that case it is the construction of the device that is the infringing action. So the LAME authors generally distribute source code (a plan to build a piece of software) rather than compiled code (the working software itself), and leave it up to you to do the dirty deed inside your computer. Whether that is sufficient abstraction to clear the hurdle is somewhat questionable, but pretty clearly distributing a precompiled LAME encoder or embedding one in software you distribute does infringe any patents used in creating it. Of course if you can set up your server in a jurisdiction that does not recognize or enforce the relevant patents, or otherwise dodge enforcement, you can distribute infringing devices and probably get away with it, just as you can set up a factory in such a place to make infringing widgets, which may nonetheless be confiscated and result in legal action if you try to import it into a jurisdiction that does enforce the patent. It is wise for Cakewalk to license whatever it needs, since companies with far bigger legal budgets have run afoul of the issue.
https://en.wikipedia.org/wiki/Alcatel-Lucent_v._Microsoft_Corp.