This letter is certainly making the rounds on the internet.
regardless of what one's personal take on it is.... Mostly, it's spot on.
If a club owner could make his money with no band (lower overhead cost) he would. The only reason they hire musicians is to bring in the paying customer. A band who attract a crowd who comes to "hear the music" and doesn't ring the cash register is a waste of money to that owner. It doesn't matter how good they are musically, or how sweet they sound, if they are not increasing the sales, they are not working for him.
I've seen it personally. I was in a band that played lots of long, guitar jam songs, with tempo changes and time signature changes..... the time sig and temp change would clear the dance floor every time. (Go listen to Saddle Tramp by Charlie Daniels... we had that song note for note.) we would play a club and the owner would pay us and basically tell us don't call me, I'll call you.... We did a lot of one shot gigs.... eventually you run out of clubs to call and play or find a few honky tonks where the pay is really low and the people are not there to dance or listen to music.
http://www.youtube.com/watch?v=AqDDKul93B0 stay with it for the change. We played a bunch of songs like that.... the band was good, but people couldn't dance to it. The band fell apart.
On the other hand, I've been in bands that played what the people wanted to hear and dance to: Wipe Out, Swinging, Johnny B Good, .....all short 3 minute songs that the people knew..... all the songs you groan when someone asks to hear it.... but the smart bands play those songs ...as many times as requested. They keep the dance floor packed and hot and thirsty.
Our house band had the same gig for 2 1/2 years. Same crowd mostly, same place, same owner, same bartenders, same packed house every weekend. That was a good gig. We mixed the old standards in with new country radio top 40 hits. Start fast, slow, fast, slow, end the set and show on a fast one.
A simple formula really if the band is interested in checking their musical ego at the door. Yes, maybe you can play the extended version of Yes's Long Distance Runaround note for note and better than YES can.... but can you play Wipe Out?
ADD: playing for free.... man I have played more free jobs than I can remember. A "free gig" is never free.... it's actually putting you in the hole. You have expenses such as gas to get there, and gear that you own, borrow or rent for the gig, and your time from the moment you start loading up until you unpack back at home 6 hours or more later.
The question here is .... Is it ultimately worth it to you to do the gig for free? While there is the bar owner's side of the equation, there is also your side. Are you going to gain anything from playing.... including the simple satisfaction of playing your music for a live audience? If you can answer that question with honesty, and satisfaction as to why you are willing to play for free or very little compensation, then you will be comfortable playing for whatever the situation brings.