TerraSin
Why is Cakewalk still charging for an internal encoder?
MP3 encoders cost money. You have to pay Fraunhofer each time you distribute an MP3 encoder.
So what about LAME you ask? Well there are three answers to that:
1) When distributed as source, it is legal as an academic work. It is allowable for people to use the spec and code and play with it to enhance and expand it. So doing an OSS thing like LAME is allowed. Notice that the actual LAME site distributes only source though, there is no compiled version.
2) When distributed as part of commercial software, it requires a license paid to Fraunhofer, just like any other. So a company can get the LAME source, compile a LAME DLL, and include that legally in their software, provided they paid the license for an MP3 encoder.
3) It is illegal when distributed and used without a license as a binary. Not to say it doesn't go on all the time and get used all over, but it is breaking copyright law, at least in the US (I don't know that the patents are valid in the EU anymore). So if you find a 3rd party LAME compilation and use that to encode MP3s without paying for the license, that is technically illegal.
Hence the reason to charge for the encoder. Same reason Windows 8 doesn't play DVDs: It costs money for the MPEG-2 and CSS licenses. Since people aren't using their systems for DVDs much anymore, MS decided not to pay the license for all copies of Windows and thus not include the components. Instead, you can buy them separate.