This is a great question and I have some experience with it.
I have only gotten a Copyright strike once, and that was back when I was doing my Funkyharp YouTube channel, I did a lesson on how to play the harmonica solo to “Take the Long Way Home” by Supertramp. The copyright strike levied by the copyright owner made my video disappear, and put me in bad standing with YouTube for 6 months with various restrictions.
I was furious in part because part of what they call the “fair use clause” is that you can use portions of copyrighted material for educational purposes, but I didn’t pursue it since I’m just one little person. I just let it go.
More often, what smarter copyright holders will do, instead levying a copyright STRIKE that forces YouTube to remove the content and punishes the channel that published it (3 copyright strikes within a certain time period will result in YouTube deleting the channel), the smarter copyright holder will issue a copyright CLAIM.
I’m not sure about the details of percentage splits, but the copyright holder who issues the claim gets to participate in some percentage of the revenue generated by the channel that publishes the content.
If you’re not monetizing your videos on YouTube, then it’s a moot point. So you can post a cover on YouTube, and when it asks you if you want to monetize with ads choose “no” and you are 100% in the clear. You don’t have to worry about getting clearance from copyright owner. It’s not a commercial enterprise. You’re just having fun, sharing with friends and family.
Fact of the matter is, it’s basically free advertising for the copyright holder because someone may well see your cover, and then go listen to the original on whatever platform they’re inclined to use. That’s why I was so angry with the Supertramp copyright owners when they struck down the video I’d worked so hard one, which only would have actually drawn more attention to the song itself! They not only shot me in the foot, they shot themselves in the foot as well.
I think @HarpinBobbyMcB brings up a great point that “size matters.” If someone covers a song in the forest and nobody hears it, does it actually make a sound? I think for those of us who are “small potatoes” it’s often better to ask forgiveness than to ask permission. I’ll give you an example:
I used to have a blues rap project called Nowelo, and some of the beats that we made sampled music from various artists. You wouldn’t be able recognize it because of the way it was manipulated, but according to law the copyright holder still needs to grant permission for this. I tried to contact them but couldn’t get a reply. Ultimately, I decided to just gamble and release it thinking that it’s most likely not going to become any kind of hit, so nobody will even notice. And that’s exactly what seems to have happened!
Intellectual property law is very important to encourage innovation in society. As it relates to our subject, if someone covers a song and makes $100k, the songwriters are entitled to their fair share. This is very important.
The point of copyright law is not to keep people from being able to enjoy singing or playing a song that they love for some friends and family! Fear not. Let’s see you cover!!!