While there’s no argument here that song lyrics are copyrighted material, there are hundreds of websites out there which are solely dedicated to listing complete lyrics of songs. A Google search for any song you can think of will turn up dozens of examples, even more depending on how popular the song is. I’ve been using several of those sites as reference for years, and never once have I noticed any of them being served with legal notice from any copyright holder, even from highly litigious artists such as The Beatles or Prince.
So I’m wondering, is there some legal loophole, such as “Fair Use”, that allows these websites to exist?
Essentially, there is no fair use for song lyrics. Any recognizable snippet is a potential copyright violation.
It depends on how strongly the copyright holder wants to pursue a lyric site. The Beatles may be litigious, but, remember, they put all the lyrics to Sgt. Pepper on the album sleeve. I doubt they’re bothered by having lyrics on the Internet. Also, the sites means that bands play their songs, which means more royalties for them (any public venue pays ASCAP fees to the songwriters).
You are not required to sue copyright violators to keep your copyright, so it’s smart business to leave the sites alone.