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There are variations on pay to play here in LA. I argued with one guy about it - he claimed his "promotion" wasn't pay to play but it ends up being a semantic issue. I've worked with some promoters who don't require a ticket presale but do either want an assurance of a door minimum or in some cases a guarantee (which is essentially pay to play, just not up front).
As Jeremy said it is win-win for everyone but the band. The club gets a cut of the door money and the bar, the promoter gets a cut of the door money (and maybe a cut of the bar), with zero risk and very little effort (usually a craigslist ad and some time emailing people). The band gets a place to play and can make money *if* they draw above the minimum and can sell merchandise.
We've bypassed it and just went direct to club owners to pitch what we do. We don't make much money but we get to play what we want, and I'm on track to do well over 100 shows in 2011. I can do that because I have a day job though...
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