Probably one of the most simple summaries on music royalties has been by published on www.howstiffworks.com and written by non lawyer Lee Ann Obringer. Most of the references is US based but still relevant and a great overview all round. This is the introduction and there is a link to the full article below. 

"Watch MTV or open a copy of Rolling Stone or Spin and you'll be checking out some musical members of the entertainment elite. The clothes, the jewelry, the cars, the clubs, the houses... One might wonder where, exactly, all that money is coming from. How much does the artist make from CD sales?

Bars, clubs and coffee houses across the country are overflowing with fresh, talented musicians who want to join the ranks of these performers. But really, what are the chances of making it to stardom and retiring on music royalties?

Making money in the music industry is tricky. Recording contracts are notoriously complicated, and every big recording artist has a small army of legal representatives to translate and negotiate these deals. In this article, we'll look into the world of music royalties and see how money is actually made in this industry.

Who Gets What?
The first thing we need to do is distinguish between recording-artist royalties and songwriter/publisher royalties.

In The Internet Debacle - An Alternative View, Janis Ian, a singer/songwriter, states:

"If we're not songwriters, and not hugely successful commercially (as in platinum-plus), we [recording artists] don't make a dime off our recordings.She's referring to the fact that recording artists and songwriters do not earn royalties in the same way. Recording artists earn royalties from the sale of their recordings on CDs, cassette tapes, and, in the good old days, vinyl. Recording artists don't earn royalties on public performances (when their music is played on the radio, on TV, or in bars and restaurants). This is a long-standing practice that's based on copyright law and the fact that when radio stations play the songs, more CDs and tapes are sold. Songwriters and publishers, however, do earn royalties in these instances -- as well as a small portion of the recording sales."

The only current instance in which artists earn royalties for "public performances" is when the song is played in a digital arena (like in a Webcast or on satellite radio), is non-interactive (meaning the listener doesn't pick and choose songs to hear), and the listener is a subscriber to the service. This came about with the Digital Performance Rights in Sound Recordings Act of 1995. This act gave performers of music their first performance royalties.

We'll go into more detail about the types of licenses and royalties later in this article. But first, let's look at song copyrights...".

This is just the intro to Obringers article, the other 75% and the full article you can get here along with many more.