I met a guy at Bass Northwest who told me he would not play shows no matter what. He only played for himself and did some recording for fun. He said playing gigs was like being a furniture mover with bad hours and worse pay. He had a point. But I have been happily ignoring his advice.
I know a guy that is a good guitar player, owns loads of quality gear, and loves to play. He said he was offered $500 to play one night a week with his "band" (its a trio that just get together to jam regularly). Said it was not worth loading a guitar, amp, and spending a few hours at the bar to earn the $$. Of course he doesn't NEED the money because he has a successful business but he has a lot of free time now that the business is on auto-pilot much of the time.
I was thinking that I can't remember the last time I was in a band that made $500 for a nights work. 90% of the gigs I have played have been free, for drinks, or the promise of a better gig next time. I would still play the free gigs just to play because I enjoy it. I never expected to make money playing and it was always satisfying on a personal/social level for me. I enjoyed hanging with my friends and sometimes we got to make noise for other people. Would have been nice to make money but that was never the motivation.
I do feel that many bars/venues can pay for the music but they know they don't have to so why offer?