When bad copyright law hurts good singers

My one reality TV show indulgence is American Idol. I accidentally caught an early episode during the second season and I haven't missed one since. During the two years I've watched it, I've long wondered why singers choose the songs they do, since song choice is everything in the competition and frequently folks seem to choose from a fairly narrow pool. At one time I thought that maybe they could only sing songs that 20th Century Fox had the rights to, or that labels were friendly with.

(51 sec, 17Mb mpeg2)

Tonight, during the voting off phase, a contestant let slip that they do actually have to deal with song rights clearance, right up to the moment the show airs. Watch the clip to catch the explanation, and how the chosen song didn't work out. She was voted off the show moments later.

I know there are rights built into music law that anyone can do cover songs, but I suspect that's only for recordings, not performances, and the rights holders of songs have a say whether their song can be sung on a national show or not. It's a shame because often you'll see someone do really well in the audition phase where they seemingly can perform any song they want, then flounder on stage when limited to the cleared song pool. Aloha was a pretty good singer, but I guess performance rights can get in the way.