I understand Splash. I know the owners of the bars we used to play at and they never said anything about being sued because we did covers there and they never asked for a set list to determine who they had to pay! Very strange. I understand this if you are going to record someone else's music and make a profit but just playing it in a bar? How many bars can be sued for having Karaoke if that is the case?
Usually, they pay a fee that covers everything--not just band specific stuff. As long as you pay the fee, you can play jukebox stuff, or karaoke, or bands can play covers. One fee covers everything. At least that's how I understand it.
So as long as you pay the licensing fee, you can have bands, or karaoke, or whatever. You don't have to look at a band's set list.