Let me clarify before I begin. I'm talking about businesses that offer live music as a compliment to their core business, e.g. a rock band at a bar, a one piece acoustic show at a coffee house, or a jazz band at a winery. More than just a stage in a building that sells tickets. The current practice is for venues to pay little and require musicians to provide customers. Here's what Goldberg had to say about it:
If you asked a club owner, "who is your target demographic?" I doubt they would answer "the band’s friends and family." But yet clubs operate like it is. Another example, I answered a craigslist ad for a nice looking place in Beverly Hills. The ad read…"looking for a high energy jazz band, if you can bring the band and have a following, I will put you on stage." That logic seams to say that they think musicians in a jazz band know lots of people living in Beverly Hills. And the people those musicians know, have lots of money to spend. Those are two pretty big assumptions. Good luck finding that combination. Even if you find that combination, are you going to find it every night? Because friends and family of a professional musician won’t come out that often. They can’t. This is what we do every night. Would you expect the chef’s friends and family to eat at your restaurant every night? How about the dishwasher, the waitresses, the hostess? Or how about the club owners friends and family? You see, when you start turning this argument around, it becomes silly.So every night venue has live music, the owners want a different crowd of people who won't come back until the band comes back. It doesn't look like a very good business model. For a business to thrive they would want to have a customer base that is loyal to the venue. The entertainment should help build that loyalty with the businesses customer base in a complimentary way. Instead it's looked at as a temporary boost, only lasting the one night when the musician is there.
Goldberg also retells an argument he had with a venue owner:
At the end of the night, I go to get paid, and hope to book another gig. The club owner was angry."Where are your people?" he asked. "All these people, I brought in. We had a speed dating event and they are all left over from that." I pointed out they all stayed and listened to the music for 2 hours after their event ended. That was 2 more hours of bar sales, because without us, you have an empty room with nothing going on. He just couldn’t get over the fact that we didn’t walk in with our own entourage of fans. Wasn’t happy that we kept a full room spending money. Right when we were talking, a group of people interrupted us and said "you guys sound great, when is the next time you’re playing here again?" The club owner, said "they aren’t, they didn’t bring anyone."As a thought experiment, imagine a situation like this. A club has a few regulars, and the owner only brings in bands that have a bunch of friends that come to see them. Keeping in mind that having a bunch of friends who come to a club to hang out with you does not equate to being good musicians, let's say this hypothetical band isn't very good. The band and their friends come, but all the clubs regulars leave. The club makes money for the night so the owner's happy, and asks them to come back. How many times does the band have to show up and make the regulars go home before the regulars stop coming back. This is a flimsy and temporary business model.
A much better model would be for the venue to act as a filter so that loyal customers would always know that there is going to be great music there. This is similar to an article I read on Techdirt about how a "music affinity group" would be an improvement over the record label business model.