There are a whole bunch of related but separate components that go into any musical venture. First, you've got material, then you've got performance, then you've got artistry, then you've got recording acumen. All of these may be present to a greater or lesser degree in any project.
As this relates to the original band vs. cover band dichotomy, cover bands give themselves a big head start when it comes to audience appeal because they start with good, proven material. I think one of the big reasons that most original bands don't draw big crowds and get paid a lot is because almost none of them have material that's as good as the average cover band. Songwriting is a craft, and a cover band has, in effect, the greatest craftsmen in the world working for them. An original band that wants to go toe to toe with them has to have material at the same level. And the sad fact is, most guys playing in their basements are just not on par with, say, Lennon & McCartney (or fill in your favorite songwriters).
You may say, "Well, duh! Those guys were the elite of the elite." But that's the competition. Then add in the HUGE advantage cover bands have because in general people ALREADY KNOW THEIR MATERIAL. New unknown material is always going to be a tougher sell, but to even really be in the game it is vital to have really, really good songs.
The original band snobbery I've seen usually takes the form of claiming some moral superiority because someone is playing HIS (or HER) music that HE (SHE) WROTE. It is their Art! They are Artistes! But this is almost invariably accompanied by redefining expectations and what "success" means to be something pretty small. There is always a small segment of the population that will be interested in hearing something new for the sake of hearing something new. Most original bands cede the field to cover bands and ONLY go after that small segment. So they do something new, and get a certain amount of credit for that, but there is a huge potential audience of people that like good songs, and they don't even go after that audience because when push comes to shove their songs are just mediocre and formulaic and aren't really saying anything very well.
I suspect that in their heart of hearts a lot of those people know this, but they keep putting their low-grade, poorly crafted songs out there. It's basically masturbation; it makes them feel like Artistes who make Art. And sometimes a flash of true artistry can overcome poor craftsmanship, but (a) not always, and (b) flashes of true artistry are much fewer and further between than most Artistes realize. Just because you make up a song doesn't make it great art. Art is about communication. If your art doesn't connect with an audience, it fails as art. I suppose by most definitions it's still art, but not all art is GOOD art.
Then there's performance. That's an entirely separate subject and an entirely separate craft from songwriting. In general, it seems like original bands seem to worry less about their show. I suspect that a lot of original musicians feel that because they are Artistes making Art, they don't need to lower themselves to think about something as gauche as interacting with the audience or trying to put together an interesting stage show. Now, lots of cover bands also skimp on this, but among good cover bands I think that conscious effort towards crafting a good stage show is more common. Also, cover bands have the advantage of having the best songs ever written available for their repertoire, and that can get you cut a lot of slack by an audience.
There's a chicken vs. egg question as to whether it's so hard to get ahead as an original act because there are so few opportunities, or whether there are so few opportunities because there are not enough good (great songwriting craftsmanship and great performance) original acts to support them.