I don't know this for a fact, but I will bet you that it's not legal to record a copyrighted work onto a cassette and give to your friends, either.
The RIAA tried to get this enforced when cassettes first came out, but dropped it because everybody realized that cassette copies are not as good as the original, and that copies of copies just make it worse.
With the advent of CD copying, it's more feasible that a copy of a copy of a copy is just as good as the original. So they care more.
The recording industry has several "collection agencies" (musclemen) who have tried to pursue all avenues for more revenue (including getting bars that have a tv on to cough up money because there could be a tv ad with a song in it). The name of their game is collecting money. Not paying it out to labels or artists. The more money they bring in, the more of it they can skim off for themselves.
Everyone wants to exist in a growth industry. Consider the home tapers a "new market" to tap.