Wrong, wrong wrong.
If you go to Glastonbury and film a band with your mobile to send to your parents, you're infringing copyright law. If you use a camcorder to film a free concert in Hyde Park to show your siblings, you're infringing copyright law, if you film a small band in a record shop to show your friends, you're infringing copyright law.
The ONLY time you're 100% safe is if (a) you own the copyright or (b) you have written, signed permission to use the material in a specified way. It's that simple.
Since (a) does not apply in this case, you can get licences to use the material from the IOV (Institute of Videography) the PRS or various other institutions by paying a small fee. It's your decision as to whether you're going to pay this fee for a video which is only going to be seen by a few friends or just use the material and hope that you won't get caught.
Ignore any half-legal phrases such as "not for payment" or "for domestic use only" they're just urban myths. Copyright law is one of those subjects which tends to bring out all sorts of half-remembered rumours, often being confused with using excerpts from written publications which has nothing to do with music rights. This doesn't mean that you're going to get your door kicked down and raided for copyright infrigement but be aware that it's a bit like speeding... everyone does it, very few get caught, but those who do end up paying a fine.
Edit:
I'm sorry if I'm being a bit blunt but this subject comes up a lot, usually followed by heaps of wrong advice. To make things absolutely clear, here's a quote from the actual legislation...
It is an offence to perform any of the following acts without the consent of the owner:
Copy the work.
Rent, lend or issue copies of the work to the public.
Perform, broadcast or show the work in public.
Adapt the work.
Fair dealing is a term used to describe acts which are permitted to a certain degree without infringing the work, these acts are:
Private and research study purposes.
Performance, copies or lending for educational purposes.
Criticism and news reporting.
Incidental inclusion.
Copies and lending by librarians.
Acts for the purposes of royal commissions, statutory enquiries, judicial proceedings and parliamentary purposes.
Recording of broadcasts for the purposes of listening to or viewing at a more convenient time, this is known as time shifting.
Producing a back up copy for personal use of a computer program.
Playing sound recording for a non profit making organisation, club or society.
(Profit making organisations and individuals should obtain a license from the Performing Rights Society.)
Urban myths...
Please note that a private person may PLAY music but not USE the music. So editing the music into a video is NOT covered by the last paragraph. It means that you can play the CD in your living room or at a private party providing that it's not a commercial venture in any way. The term "Incidental inclusion" covers the interview made with a transistor radio accidentally playing a song in the background. If it can be proved that the music is deliberately included in the video, then you're breaking copyright legislation.
The legislation can be downloaded and read at
http://www.ipo.gov.uk/cdpact1988.pdf if you really have a long, boring weekend with nothing to do...
music copyright advice 
Linear Mode
