It's good you are smart enough to ask about this before you do much.
You need to hire an Entertainment lawyer, preferably a music lawyer, to review your situation and give you strategic recommendations. You simply are not going to get a specific recipe for your situation for free here on Avvo listing everything you need to do. In fact, it would be unethical for us to do that as you are not a client.
As to how the music industry works, how royalties are figured and paid, you might read the book
All You Need to Know About the Music Industry by Donald Passman, which you can buy on Amazon for about $30.http://www.amazon.com/Need-Know-About-Music-Business/dp/1451682468
There are two copyrights in music, one for the music composition and lyrics, and a second for the sound recording or performance of that music by a particular artist or group.
Digital downloads and Internet radio have pretty much taken over the music industry and have rendered CDs largely obsolete. This has changed the industry and opened up new opportunities, so be sure you get current information.
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.
First and foremost, you should register your copyright. I would need additional details to give you more advice. I would suggest consulting with an intellectual property attorney and giving them the specifics of your situation so you are thoroughly covered.