IMO the distinction between what GUEST,John C says above calls 'circles' and 'concerts' is what happens already, for what I would call well-run clubs, i.e. some clubs only book well-established guests and good quality (in terms of performance) support acts - these are what I call 'concert' type clubs; and the more informal clubs where people meet up for the enjoyment of playing music with others, or in front of others while they are learning their craft (often called singarounds or sessions).

People attending a 'concert' venue will pay a reasonable entry fee that will cover the cost of the booked artists (hopefully, anyway - if not then the event will make a loss, and continued losses will cause the club to close). People attending the 'circles' type of event (to use John C's term) will only pay a nominal fee to cover the cost of running the event (e.g. the cost of hiring the room in a pub).

The latter type may see performances from people who are not (yet) of a 'professional' standard, understandably as the participants are still learning. Yes, it may well be that some of these individuals will never progress beyond a basic ability and will never reach the standard required to 'progress' to performing in front of a paying audience. But that doesn't matter - they are there for the enjoyment of making music among friends, primarily, not to become the next star performer.

The problems arise when you try to combine the two types of event. Some clubs I know do both, but not on the same evening, e.g. they might have guests every other week, alternating with singarounds or sessions.

Clubs that try to combine the two run the risk of alienating the audiences they wish to attract, by putting on substandard unpolished performers alongside professional guests, with the result that audiences might begrudge the entrance fee, even if the guest is good, because they have to sit through what they see as 'rubbish' beforehand (we've all been there). It seems from what I've heard that some clubs still try to do this, and I think these are the ones that are not 'well run'.