Well, I am sure people have already given you
perfect advice (havne't read their posts yet).  So
if this is a repeat, then, well, sorry!  Now, this
person is obviously a snought newbie (sorry, just
had to say it!) and they do not know as much as
they "assume" and you will have to take that into
account when dealing with them.  What would help A
LOT is if you pull their contact info and talk to
them personally.  You cannot imagine how many
times problems occur due to miscommunication like
this.

Now, if the buyer still feels the same way, you
can go about handling this situation in 3 ways:

1).  If you want to be stubborn about it, what I
would do is give them the link to contact Ebay
Safe Harbor and let them personally examine the
auction and tell the buyer whether or not they are
entitled for free shipping according to your terms
or they can go to the Ebay Forum to ask their
question (this may be a bit complicated for
newbies).   If this doesn't work, then file a NPB
report complaint stating that the buyer "Did not
follow the Seller's Terms that was stated on auction".
You can contact Paypal and explain to them that
they didn't pay for the shipping and you can't
send off the item until they do.  I am not sure
how Paypal would react to this as they tend to
favor buyers, but I am pretty sure they would side
with you since your auction term was clearly stated.

2). Offer them the option of a refund minus Ebay
and Paypal fees and just cancel the transaction
and relist the item.  OR

3).  Ship the CD via REGULAR MAIL.  It doesn't
cost much to send, but then again, you can't prove
that it was sent and that could lead to further
issues.

Personally, I would take the stubborn approach and
refuse to ship until you receive the shipping
cost.  File the complaint with Ebay.  You may risk
negative feedback, but one thing I have learned
from dealing with buyers for the past 7 years that
if you go "soft", they tend to step all over you
in the future.  BUT, CALL THEM BEFORE YOU CONTACT
EBAY!!

Best wishes on resolving this matter.

Star Phoenix