Another way to look at song, record, and album
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Let's make this simpler:
Song: "Happy Birthday" was written by the Hill sisters in the late 19th century, originally with different words. It is now owned, of course, by AOL Time Warner, and their copyright on the composition won't expire until 2030 or so. It is a song. Many people sing it every day.
Record: Marilyn Monroe's version of "Happy Birthday," sung for U.S. President John F. Kennedy, would be considered a record of that song, probably the most famous one so far.
Album: A CD compilation made up entirely of different versions of "Happy Birthday" would be an album. (Hey, they did it several times for "Louie, Louie.")
If "Happy Birthday," Marilyn's version, and our theoretical compilation CD were all new this year, they could be respectively considered for song, record, and album of the year at the 2004 Grammys. They probably wouldn't win, though.
It would be more sensible to name the awards as composition of the year, recorded performance of the year, and, er, album of the year, I guess.