The person trying out is not profiting off using the song during tryouts. So it is fair use.
If a person’s audition is used in the religion broadcast the show pays the licensing fees to broadcast the audition.
Once it reaches the live show all the songs are chosen beforehand and licensing fees are handled up front.
Though, your question brings up an interesting thought; if there are songs for which acquiring the license to broadcast is difficult or cost prohibitive…would a contestant choosing one of those songs as their audition song make it certain they won’t get selected for the show?
Organizations like SIAE (Società Italiana degli Autori ed Editori) are setup to deal with this.
Shows like X-factor pay a flat fee to SIAE to manage the copyright issues.
*Italy is actually renown for its dubbing and audio industry. Most of the alternate language versions of movies and TV shows are recorded in Italy. This goes back to the time of Mussolini who setup the basis for this industry because he insisted on having all of his speeches dubbed because he didn’t want to recorded saying something embarrassing*
Everytime an episode is edited a cue sheet with all the music that will be used is sent to SIAE. They then pay royalties to the associated artists or record companies based on pre-negotiated deals, out of the flat rate paid to SIAE.
The cost of the royalty depends on the artist in question, the popularity of the song, and the length of the sound bite. The company has this all negotiated in advance.
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