If you accept that some form of licensing is necessary for "full-on" public entertainment (which I think most people do) then the probelm becomes deciding what can be exempted and what cannot. If you accept that some things need regulating then you have to decide whather a licensing regime is necessary or whether something else will do.

If the other methods do not produce effective regulation then you are bound to go for licensing. But the law relating to noise is not an effective control for (for example) juke box noise emanating from pubs. First the Environmental protection Act duties on a local autority may very well be unenforceable if the local autority has not got sufficient resources to impliment them. Second the law on public and private nuisance is far from clear or instant. THird, most pubs make most racket over the weekend when the local authority is shut and unless you ahve already been given a "noise hotline" emergency number and permission to access that service you can't get anything done until Monday. If the pub next door has a 5 kilowatt juke disco in the garden with kids also screaming on a bouncy castle, a fat lot of use that is.

I ahve, however drafted a partial defintion of "incidental" which might go some way to helping if teh government decides to take it on board and polish it up. Here it is: -

1        For the purposes of paragraphs 7, 10 and [(the new one for partly electric music if adopted)] of this Schedule 1, in determining whether a performance is incidental to another activity or not: -
(1)        subject to sub-paragraphs (2) (3) (4) and (5) below, a performance shall be regarded as incidental to another activity if it is carried on in conjunction with that other activity (whether before, during, or after that other activity), but is subordinate to that other activity;
(2)        a performance or performances may be regarded as incidental to another activity despite the frequency regularity advertisement or promotion of performances of that or another type at the same place or in conjunction with that other activity, but regard may be had to the numbers typically attending;
(3)        a performance of live music may be regarded as incidental to another activity even though the provision of that music is a substantial part of the purposes of the use at that time of the premises at or in which the respective performance occurs
(4)        a performance of recorded music shall not be regarded as incidental to another activity if the provision of that music is a substantial part of such purposes;
(5)        subject to sub-paragraphs (3) and (4) above regard may be had to the extent to which music is amplified in determining whether or not it is incidental to another activity.