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I imagine it starts as some guys who are all just big fans of a certain band, cover their songs for fun, then realize that they're very good at it, and usually if it's a bigger mainstream band that doesn't tour very often because they're 60+ years old and live in England, then it's people's opportunity to go to a loud concert for music they like.
There was a show going down kinda nearby that was a pretty famous Metallica and Priest cover bands, and I know that I could go see Metallica or Judas Priest, but I probably wouldn't because I never usually go to big concerts like that, but if two cover bands are going to play songs I like, play them well, and it's only a 10$ cover charge to get into the bar, well that's a fun night out with your buds, doesn't break the bank, more casual experience, etc.
The band too gets to play music they already like (presumably), do a live performance, have fans, satisfy a crowd, all without having to worry about whether or not the audience will be receptive to their music because everyone already knows it already.
I've played in cover bands myself for decades, and still do. Playing covers, I always see a crowd 3-4x bigger than playing originals in the same venues. People know the songs, yes, but, IDK, I don't really go to see cover bands play. I guess mainly because there are so many talented original artists around here, and also around everywhere else I've ever lived. To me, the cover band puts in 50% of the effort just to bring you a product that is less unique. But there's nothing at all wrong with enjoying that.
For a tribute band...man, where to start? Most of those people immerse themselves into the roles of the artists they mimic. I've seen promo videos and whatnot, and, for example, an AC/DC tribute band has guys that look just like AC/DC playing instruments that are replicas of AC/DC's instruments, and they sound as close to AC/DC as possible. It's like I'm watching Val Kilmer play Jim Morrison in a movie... And many of these bands tour nationally or internationally. I guess I can't put myself in the shoes of a guy who goes on tour for twelve weeks pretending to be Phil Rudd...
And, well, now, AC/DC, I guess is not going to come around again, but when they were still touring with Brian Johnson, I would have been excited to tell my friends I had tickets to see AC/DC, an absolutely iconic rock group. Getting tickets to see an AC/DC tribute band, on the other hand, just doesn't have that "iconic" nor "cool" factor. But I'm not trying to judge. Fun is the name of the game, and if it's fun, then, by all means...