Okay, I see where you're going wrong now at least
From the INSTALL file from libmad-0.15.1b.tar.gz:
Okay so - basically that means you need to set the directory to install libmad to from the 'configure' program.
Here's an example of doing so on a DH server:
I created the directory 'lib' and 'libmad' within my home directory before I did this. This is actually a generic source package install, so you could apply this concept to future programs you might install through the shell as well.
Alright, so after running the 'configure' program, you can simply do as you had before: type 'make' and then 'make install'. And that should get you a working libmad installation