I think you did a great job to demarcate those three facets of copyright law as I understand them too (not a lawyer, big time IP hobbyist though). There are tw

I think you did a great job to demarcate those three facets of copyright law as I understand them too (not a lawyer, big time IP hobbyist though). There are two other aspects that might be relevant, and are only presented as complimentary, not contradictory. The first is that in that the recording the Engineer is doing is a "Work for Hire" as I see it. While they may negotiate 'points' of residual income from the sales of the recordings for their labor/efforts/contributions, the ownership issue is a lot more simple. The other angle is that 'derivative' works, especially for Fair Use, have a really high bar to clear in modern times - but it's possible. So, if Charlie is a Professor and he recorded Bob's performance of Alice's work, expressly so he can play one full song as an example in his University class "The Art of Shredding on a Violin while Playing Harmonica and Jumping Up and Down Simultaneously," then Charlie's use of the work should fall under Fair Use, and it doesn't matter the students are paying for the class or Charlie is paid an income by the institution. He's promoting progress of the arts and is protected in theory.