i always thought playing covers was "fine"
that bars/clubs paid ascap/bmi/sesec (the 3 major ones that cover 99% of all artists)
if a solo guy/new band was to pay them it would almost make it not worth playing for in the end
i can also tell you 100% that ascap/bmi/sesec take it pretty serious and will come after owners
i can also tell you that anyone and everyone who plays music, even a cd while you are on hold is suppose to pay ascap/bmi/sesec
if ascap/bmi/sesec were to come after you its not like they are going to rack you over the coals until you don't pay then its game over
somewhere there is an article where a bunch of clubs didn't pay and after a number of times being warned got fined pretty good - one was in rochester ny
here it is -
http://www.wired.com/listening_post/2007/07/ascap-cracks-do/