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Dealing with rivalry and competing bands

The first thing I'd recommend doing is taking this kind of thinking...



...completely out of the equation.

It's clear here how upset you are about this. It's even more clear that you're blaming that band (and that particular guy) as opposed to simply owning up and saying your band has to do something differently, or better - to start landing more gigs. That attitude I'm sure is seeping out into your entire band and others around you. All you need is one person with a big mouth to start saying, "Heathenheart is blaming so-and-so for their inability to get gigs!" That starts to make your band look bitter, childish, unprofessional, AND if the clubs really like that band (as it seems they do), well... you can forget it. You'll be laughed at and won't get booked despite how talented you might be.

It's MUCH better IMO to think nicely of them, wish them the best always, and then do whatever it is YOU need to do to start securing more gigs. People who get gigs aren't the petty, angry take control and screw everybody else over people. They're the people others like, the friendly happy people who learn how to communicate well and work with people professionally. Please do yourself a favor and work towards changing your attitude and view. I don't see any winning scenario if you hold onto it. That band is there. They're getting gigs. Deal with it and let go of any bad feelings, envy, jealously etc. It might not be easy, but it's doable.

I'll add as others have stated that they can't be playing every night of every weekend. Most clubs I know of won't book a band more than 2X a month. That leaves 8 or more Fridays and Saturdays available for each club that you're talking about. If you're not getting gigs, I can't see it being that band's fault.

Erase them from the equation and figure out how to start getting more gigs.
^^This.

I suggest going out to all the venues in your area and studying the gigging bands.

What's on their set list?
How often are new songs added?
Do they have good harmonies?
Are they entertainers along with good players?
Is their PA top of the line?
Do they have a sound person?
Do they keep their volume manageable?
What's on their instragram or facebook?
Do they have a manager? agent?
 
Personally, I thrive on competition. It makes me want to work harder, faster, and better.

I would closely watch what he's doing and then find a way to do it better, be it getting gigs, putting on a stage show, dressing well, whatever. Go to their shows, find out the hows and the why's and do it better than they are.
 
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Out of the blue, the other band manages to get booked on pretty much all the available venues. They don't have any new material whatsoever, no recordings at all, the band doesn't have a following anymore and their performance with the new musicians is just... bad. However, the band leader is friends with all the local promoters, so he is riding the high of 2 years past.

The ONLY thing you list there that would be a negative factor in the eyes of the owners would be if they truly don't have a following anymore. If that is the case that will become apparent to the owners pretty quickly. But at this point they have a more recognizable name (it appears), and the owners are banking on that turning into a better turnout.

Also worth noting here is the value of being friends with the promoters and owners. This should prove as an example of why it is imperative you spend some of your time/energy in creating or improving your own relationships with them.
 
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