I understand the feelings of some of the payed musicians on this forum but like all issues that effect us personally it's hard to be objective.
It boils down to the following question. If you choose performing music as a way of making money why should a money making venue subsidize you by not choosing a business plan that includes the low cost option of open mic nights? It's freedom and capitalism in the raw.
Tony
Around here, most establishments that offer open mic also have paid bands the rest of the week... so it isn't as though the open mic undermines the other musicians.. they draw different crowds.
Karaoke and open mic both draw an audience of active participants that hopes to watch a while then play a while. Most of the people in the open mic audience have their names on the list to perform. Same goes for karaoke.
Traditional bands appeal to an audience of passive observers. They came either to socialize or to hear the band. In both cases they tend to be passive observers while the open mic and karaoke crowds tend to be active participants.
In the same sense that Eddie would not be interested in attending a karaoke or open mic night, those crowds would probably not be interested in watching someone else perform if they didn't have the chance to get on stage next.
The establishment owner has an incentive to appeal to all of the above crowds, because if he limits it to the same one every night, it dilutes the earning potential. For example if his live music audience tends to spend $x,000 a week, if he can focus the same 7 day income into 5 days, anything he makes on the other 2 days from the karaoke and open mic crowd is gravy.
So in a sense, these karaoke & Open mic acts help the club owners to stay in business, which is good for the other acts that are getting paid.
But there is also the case of minimum quality, below which point it drives customers away. Lots of open mic nights close down because the quality is such that even the other players get embarrassed and stop coming.