Not enough musicians know this, but once your song is registered with a Performance Rights Organisation (like PRS, BMI, ASCAP etc.), every time it is performed, even live by you, you are entitled to royalties.
While the amount you’ll receive will depend on the size of the venue, you can even earn a significant amount for busking. Getting into the habit of claiming is important, particularly in case of any big break you get supporting larger artists that might come your way.
When performing covers, you won’t need to pay the original artists anything. Ever! The responsibility of payment always lies with the venue owner, who will normally have obtained a license to cover payments. When a cover is performed, royalties that you would normally have been earnt are transferred to the song’s copyright owners (the songwriters and their publishers) instead. This may seem like less incentive to play cover songs but it can be beneficial to artists who you feel deserve the recognition and income, particularly if played to a large audience and if the favour is returned.
To claim royalties (and let your PRO know who you’ve covered), you can head to the your PRO’s website and report you live performances, you’ll also be able to claim any unpaid royalties too. You should receive these quarterly along with your other royalty payments.