I'm sorry but if a pub/cafe/restaurant is making money by a named musician being there and performing then that musician deserves a share. They're being used for commercial purposes and the owner isn't doing it for the love of putting on music, they're doing it to make money.

Festivals are an interesting one and it seems that the unpaid artists are creeping further and further up the bill (possibly as headliners get more expensive). I can see why artists do it and for many festivals I don't have that much of an issue with it although I'd prefer to see payment (after all the artist is expected to turn up at x, do a set so long etc just like a paid performer). Where I do have an issue is where the large profit making festivals (across genres, it's not unique to folk) are doing it to cut costs so the organisers make more money.

Steve
Steve