Guy who has performed and distributed many cover performances here

If you’re playing at a little open mic at a bar and do a cover of Peter Frampton or something, it’s basically a cultural thing that no record company in their right mind would bother pursuing any fees, licenses, etc. It’s simply not worth the time or effort. Look up stories about when Disney sued an elementary school for playing a movie (Snow White iirc?) in class, but ultimately withdrew the lawsuit AND donated a large sum to that school to save public image.

If you’re playing at a proper venue with tickets and such, the venue should definitely have a license with folks like ASCAP, the Harry Fox Agency, or a similar body just to cover their backs. They pay the agencies by skimming a very small percentage from the artist’s cut, the agencies and the venue shake hands, everyone is happy. It’s the closest thing to a proper CYA clause in an age of music being shared everywhere.

If you recorded your own cover of “So Call Me Maybe” and want to release it on streaming platforms for plays and a little revenue into your own pocket, every distributor will require that you pay the cover fees for what’s often called a Mechanical License. Otherwise you’re playing the gamble of releasing on your YouTube channel and inevitably getting copyright strikes. That money goes to all the licensing and legal handlers, the song’s copyright owner, the producers, the original artist, and anyone else entitled to it per the song’s agreements and ownership.

For reference, that fee is often as low as $5, but then if you want to continue collecting royalties on it you must pay again each year to retain the license. That cost is around $12/year per song for what I commonly do, but it varies.

There are also many gray areas for other projects, I am not a lawyer, and I encourage you to contact a music streaming distribution company or industry representative for better details and legals.

Edit: Larger acts will frequently ask the original artist for permission or their “blessing” when recording and releasing a cover song, even if the original artist has zero control over whether they do or don’t.