As for how cover bands work, I read this quick blerb about it on wiki:
"Since the Copyright Act of 1909, in the United States there has been a right to record a version of someone else's tune, whether of music alone or of music and lyrics.[7] A license can be specifically negotiated between representatives of the interpreting artist and the copyright holder, or recording of published tunes can fall under a mechanical license whereby the recording artist pays a standard royalty to the original author/copyright holder through an organization such as the Harry Fox Agency, and is safe under copyright law even if they do not have any permission from the original author."
I think thats pretty interesting.
Discalimer: I am not claiming the above work(from wikipedia) is mine nor am I claiming it to be factual.
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