There are four Grammy categories that carry the most prestige—Album of the Year, Record of the Year, Song of the Year, and Best New Artist. The latter is self-explanatory, but what of the other three? For the distinctions between Album, Record, and Song, we have to look at the Grammy academy’s rules about who is eligible for each of those awards.
The Album of the Year, considered the crowning achievement of the night, is for overall accomplishment on the entirety of the album. Yes, people colloquially refer to albums as “records,” but in Grammy terms, the "Record" category is far more similar to "Song." When Album of the Year was first awarded in 1959, only the performing artist was recognized, but by 1965 producers were included. Today, engineers and sound mixers who worked on the album are also eligible for a Grammy win.
Record of the Year, like Album, recognizes both the artist and any producers, engineers, mixers, etc., who made an individual song. The Record of the Year commends the actual recording of the track—what exactly you hear, how the instrumentation was layered, how the beats were mixed. For example, when “Get Lucky” won Record of the Year in 2014, 10 people were awarded trophies: Thomas Bangalter and Guy-Manuel de Homem-Christo of Daft Punk (who also produced), plus featured artists Pharrell Williams and Nile Rodgers, four engineers/mixers, and two master engineers.
Song of the Year pertains to the songwriting—this award goes specifically to the songwriter, composer, and/or lyricist nominated for the single. This is usually a much shorter list, commonly no more than three or four people each year. Oftentimes, as is the case with singers who write the majority of their own songs, it can go to just that one individual. For example, when “Rehab” won Song of the Year in 2008, Amy Winehouse was the sole recipient; same with Alicia Keys winning in 2002 for “Fallin,’” or Bruce Springsteen in 1995 for “Streets of Philadelphia.”
Song of the Year illustrates why songwriting credits are important—if a band performs a song that wins in this category but only one member is listed as the songwriter, only that member wins the Grammy. For example, when The Police's “Every Breath You Take” won in 1984, only Sting walked away with a Grammy. Similarly, in 2003 Norah Jones and her album Come Away With Me swept all four prestige categories, and though Jones left with five Grammys that night, she herself did not win Song of the Year. That went to songwriter Jesse Harris, who singularly wrote her hit “Don’t Know Why.”