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Yeah but have you tried to hire your own venue ?
I think many people are a bit ignorant about this stuff.
Have you also enquired about the insurance costs ? Security ? promotion costs ? etc etc ?
There is no difference to "paying for play" and "hiring the venue". YOU are still paying and when it comes to hiring you could pay thousands instead of hundreds or even tens as is the case when doing one of these "pre-sale" gigs.
The bottom line is this, whichever system you use for live performing, if the punters are not paying then someone is losing money on you, even if that person is yourself. Nightclubs seem to have cracked it. Charge lots of money, get girls in the venue for free or cheaper than blokes, offer party regulars extra income by promoting the gig (inviting their mates and anyone who would think they have a tiny chance of shagging them). Nightclubs are full every week and charge punters a lot more than music gigs and that's not even with a big name DJ. Something to learn perhaps ?
Start small. We hired local village halls and played in pubs when we started out. Try and get the local paper interested. They often need something to help pad out the spaces between adverts and get fed up with school project stories. They especially fall over themselves if we give a percentage to a local charity, and that angle puts a few more bums on seats.
If you're good, word soon gets around. The target local radios, etc.
It can take time and effort, but this business has few easy rides.
This works for you as you would have lots of acts that you could showcase so therefore you will be requiring your artists to bring people as well as support it with advertising. What about public liability insurance ?