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on a big city being a promoter is not such a deal as you know it's hard a hit and miss if you pick a big name, the venue is going to be packed. On a small city there is the problem that you won't find big venues to fill, then the tickets have to be expensive so potential customers are less likely and this make a spiral that is difficult to overcome.
The key is picking someone who can attract enough people but whose cache is quite low, i think Avicii was an example of this now he must charge a lot but 2-3 years ago when Bromance killed the charts he was just a known guy that probably just wanted high profile gigs to make a name out of it at any cost. What i'd do if i were in his position at that time with some singles creating madness in the charts is playing for a small fee on big festivals it is like an investment.
Another good strategy is the underground parties, you can book an underground guy to play for 2k$ and make a 10$ + drink ticket fee, the average techno head will drink 3 drinks and inhale 3 shots of cocaine that night so you can get the cash safe with just 300 peeps.
About the illegality of promoters... sure the owner of the club where i am resident at has just bought another big one in the city, now he has the 4 most famous clubs in Milan with celebrities walking in every day. You have like 2 kind of vips those who pick a bottle of booze and leave 200€ in cash which does help to pay the bills and this high profile vips like A.C Milan players who are willing to spend 2000€ a night, how you get this people in is not a secret. Drugs on every table, prostitutes etc... the noise regulation here makes clubs to close at 4am. His venues close at 6am with the police coming not so regularly to take a fine and him paying it instantly to keep the venue open, if it closes at 6am is because there is a high demand and considering that on some nights (thursday night for example is when i am in) you can enter for free prior 00:30 and after that is 15€ 1 drink a lot of people can avoid spending big sums because there are free shots everywhere so the drink is just to avoid dehydratation.
The other day a guy died in a riot, club is still open and they didn't close that night (started inside, died outside due to a hit on the head) that makes a strange compound...
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