Well, there is way...but you have to use Roxio,Sony software or Cretive Sound Card(Audigy2)to do so.
Roxio
There a software inside Media Creator that is called Sound Editor, you just have to open, adjust your record volume and that's it.
Sony
Use the Soundforge Audio Studio to record audio on the fly as with Roxio.
Creatiive
This one the best since that sound card includes a Karaoke feature with the card software where you can control the input of the music and the input from the mic separately. You can even add effects to both or to a single input. On the front panel of the card you will find a 1/4 input for the mike and the volume control. I have used it myself and it sounds great but is a little expensive, about $220.
About the legally aspect of these I don't know. I am talking about a process to record not encouraging you to do so commercially. I don't think that someone recorded at a show will be able to sell thousands of copies of his performance. I have a friend that has a license from ASCAP and he records people but he has to keep a log of the recordings and pay a small fee for each song. I know , that he should be able to provide his log for them to audit. I will have to consult him for further instructions and details.
Hope that my sug's help you out.
