1. How are lyric sites breaking copyright law?

When songs are released, the lyrics and music are published and are subject to copyright. This is a revenue source for artists, and it's how songwriters make money off covers and other versions of their songs separate from their own recordings. Record labels either own or license an artist's recordings, but very seldom hold the publishing rights. Similarly, songwriters typically sign publishing deals in which they assign some part of the ownership of their songs in exchange for royalties received by the publisher for the use of the song. The publisher brokers many deals on the songwriter's behalf by licensing out their entire songbook for various uses, such as sheet music and karaoke tracks. If a lyric site paid a blanket licensing fee to these publishing companies for use of their lyrics, songwriters would receive a cut of the revenue.