The way I used to understand was that it was basically legal to sample any part of someone else's song and alter it for your own use. But now I need to know- I'm about to enter a school contest, and I gotta know the specifics on the legality of sampling.

(Ill be using about 0.35s of the intro to the song "On Broadway". Yes, not 35s, 35/100ths of a second.)

Thanks a bunch!

That small of a sample would not even be recognized, and most people would just do it. But - contrary to popular belief, there is no "time limit" on samples. Any sample, is a sample and should be compensated.
 
Legally you should contact the publisher and tell them what you are doing. They will tell you what you need to do! (ie: if there is a way to funnel money into their accounts, they will know how to do it).
 
Don't worry, the fees will be nominal unless the track makes it huge. In which case, it won't matter!

If you are sampling a copyrighted recording you have to work out a deal w/ the recording owner.  It doesn't matter if it is a nano second - you are using their property.  As Codamedia sez, if there is little chance you can make money you won't be found out and there is no damage.  However, "Bittersweet Symphony" is what everyone talks about - The Verve lost all the money they made on a mulitplatnum CD because of a sample taken from the Rolling Stones.  The Stones might not have needed the money, but I'm sure Keith made good use of his take.

The Harry Fox Agency covers the licensing of copyrighted materials.
 
Contact them before you use samples. I think they have a different fee schedule for samples than they do for full songs....
 
But there is NO "free samples" and no minimum allowable "free" use of any copyrighted material in this business.
 
The only exemptions are for non-profit educational use only..... songs used in a music appreciation class by a music teacher would qualify.

http://library.duke.edu/about/depts/scholcomm/copyright-and-fair-use.pdf
 
This is a very helpful guide to copyright and fair use.  Many people get themselves into legal trouble by listening to uninformed people tell them nonsense about the subject.  Some others have already chimed in correctly that the whole amount of time thing for samples is irrelevant.  Fair use is one exception to copyright but it is poorly understood by most and not sa blank check to illegally use copyrighted material. 
 
With that said, odds of you getting in trouble for a small scale personal project are small, but keep in mind that if you do ge tbusted you have no legal ground to stand on.  Another option to sampling is to have a band play the music and sample that.  Publishing fees are usually cheaper than sampling fees and is a very common trick in modern pop music since you are only paying the composer of the music and not every hand that may have a legal piece of the song, including lyrics you will not actually use.
 
My advice is when in doubt, ask an entertainment lawyer.  It will skip a lot of armchair legal QB's feeding you conflicting info.  In the meantime, that free book should give you a good start.

Small time projects.... probably will never catch the attention of the attorneys but if it does, and they happen to have a slow day and decide to "make an example" out of you..... it will not be good.
 
There are stories about some preteen girls posting a copy of their favorite song with some pics and getting slammed for tens of thousands of dollars in royalties.... and file sharing download sites have resulted in the same kind of horrors.....all over someone violating the copyright laws.....
 
You take a huge risk when you do things illegally and show it to the world on the net.

Even if you don't get caught initially, you paint yourself into a corner.  I have known a nuymber of film makers who decided to use music in a film and got away with it until the unexpected happened and someone tried to pick up film for distribution.  The owners of the music realized they had film maker over a barrel and demanded ridiculous fees.  The film maker had the choice of paying or the expense of replacing music.  Not as simple as it may sound on the surface.  I do my best to avoid using any copyrighted material unless cleared because you never know when a project may increase it's scope.

In general, if you ain't making money off of someone else they have a hard time proving they were damaged.
 
Getting rights to the music is easy - Harry Fox.  You could, of course, just print up songs from other people and send them the mechanical rights as you sell them at 8.5 cents a pop.  But artists and their reps look down on that and you can find yourself having to do accounting every other week even if you don't sell any.
 
I haven't gotten samples from Fox- I didn't know about that since I've never used them. 
 
Getting rights to performance (which samples are) is harder, and can get expensive.  Back in the 90s we checked into getting one of Bob Wills' songs for a major release movie.  Even back then it was $10,000.  So we did an "old style" country song w/ fiddle for the jukebox music in a New Mexico honkey-tonk.  Needless to say, we didn't get $10,000 for it.
 
The best way to do "samples" is to recreate it yourself.  SONAR will acidize a file so you can stretch it out.  Next best is to use royality free loop libraries.  Sony has a sale every christmas and you can pick up some good CDs for $10 or so.  I never fail to get a song or two out of a CD by using a loop as a main backbone.  Besides all the other little bits you can use.
 
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Dub makes an excellent point. Every single music publisher and library now asks up front if the music contains any sampled material and wants to see the license before they will touch your music.
 
AT, In general, if you ain't making money off of someone else they have a hard time proving they were damaged.   Not so.   If you take something that belongs to someone else and simply give it away for free, there are real damages involved. They calculate based on listens and DL's and can charge you the retail price for every single person who listened or DL'd the tune...... remember the NAPSTER lawsuits? Some of those people got huge bills and the courts upheld it.
 
The "sounds like" music market is alive and well because of the very thing you mentioned with the Bob Wills tune. Ultimately, creating your own sample so that it is a "sounds like" sample is perfectly fine and it's totally legit and legal.

Guitar,
 
In general I agree w/ you.  If you are a professional, there is no excuse to risk your livelihood and reputation over stealing.  I have the same kind of arguement w/ my wife when PBS uses Doris Keerns Goodwin, a known plagierist.  Why would you use her, when their are plenty of untainted historians sitting around colleges?  She only got my complaint when I asked her if her boss, a Nobel-prize winning biologist, would hire a plagerist in his lab.
 
However, if you are a home recordists and put a .. borrowed .... drum hit or guitar lick in a song on Soundclick, the chances of anyone hearing it other than your mother is slim.  And even if an industry insider hears it and recognises the lick, what are the damages that you can be sued for?  1 download and a hundred listens at the mechanical rate comes out to @ $10.  As a professional that would be stupid, but for the home artists very little chance of getting caught.  It is more like speeding rather than hit and run.  Doing such only self-identifies you as a non-professional "artist" at best.
 
But you bring up a good point - those engineers that will replicate a "sound" for you.  Sweet work if you can get it, and I don't suppose there is much of that.  SOS had a fun article about a guy that would rent the same studio and  equipment that was used on the album that the sound came from.  I can't imagine any musician being stupid enough to spend $10,000 for a drum beat, but more power to you if you have that kind of money to throw around for authenticity.  Me, I'd prefer to keep the cash and get close enough, like the movie gig.  We didn't sound anymore like Bob Wills than Beethoven, but it worked for the incidental music. 
 
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