I agree with Leadfingers, but I am not sure that the original thread is asking about nights with paid guests.
It would seem that this club is crowded with normal punters. and, therefore, the question is, should the organisor be selective as to who has a spot.
My answer would be to encourage a quick first round, and then be selective in the second.
Then, new visitors have a second go, musicians, or singers, combine in a way suggested by the compere, a strong finisher is chosen and apologies are given to those that time couldn't fit in.
In other words, the second half is stage managed to create an entertainment, and the first half is strictly by rotation.
I must stress that I am only referring to a club that has too many members to fit in two spots each.( Nice problem to have!)