This got me to looking around to see what others have said on this topic. I found this: Second Life Terms Of Service Changes:
Prior to TOS 2.0, many Machinimatographers felt that they were completely within their rights to film content they had purchased from creators. Things such as Animations, clothing, buildings or sets, props, hair, skin or attachments. In Linden Lab's new TOS 2.0, they explicitly state that it's okay to use their own content, but if you incorporate content from other users, you must obtain licensing or permissions from the creator before including said content in your production.That the machinimatographers would assume they had permission strikes me as particularly naive. I'd think that not only would you need the written permission of the avatars, but also the artists who created each avatar's skin, the programmers who created the gestures, and on and on... Sounds impossible to manage.
To my thinking, the copyright laws render this entire new art form as illegal, or at best totally impractical to pursue. We could fix this ourselves if everyone would license their "stuff" using completely compatible open licenses; e.g. Creative Commons 3.0 Attribution (with no other restrictions). That's not going to happen.
It makes me very sad.