I observed the "Pick, Pass, or Play" model (described by Dick and Carol Holdstock above) working well to raise music quality in circles of as many as 50 mostly non-experts "filksinging" at Science Fiction & Fantasy conventions. If not up to leading a song, in your turn you can request another person and/or a song for the group to do. Picking someone you want to hear gives more turns to better performers. The truly shy signal "pass" to the next person, so with full audience participation things still move fairly quickly and pleasantly.