I feel it's a bit more complex than that. There are a number of realities we must admit & address before we can begin to change them.
There are many difficult factors at play here. The solution to all of them requires cooperation & organizing—arrows not usually found in abundance in the jazz quiver.
1) Space. Commercial rents in NYC & elsewhere are now inflated to near bursting levels. So the club (and every retail space) is under immense pressure just to make its nut each month. This is the #1 reason for ex-clubs & ex-everything else. Musicians—and artists of all types, really—need to organize and begin building coalitions w/ non-artist types in their towns & cities to install or tighten retail rent controls. Non-bank, non-fast food joint & non-national chain businesses need to know they can survive, so they can plan their business' strategy for the next couple of years. As NYC and many cities are now structured, that will take a concerted, pitched effort from new coalitions of small business groups, the local artistic community and the general citizenry which wants and needs what individual entrepreneurs and artists provide. This will most often require law & zoning changes, and face strong, well-financed opposition from various real estate & corporate factions who are perfectly happy at the moment and see no need for change.
2) Covers. In the 1990s, NYC had few cover charge joints—mostly owners paid artists (poorly) & made it back from sales, which made it easy for customers to drop in, with no pressure, to enjoy the music & to order from the menu in a relaxed way, which built repeat trade. Plus, remember folks had money money then. Prices for menu items were lower, as well, as commercial rents were lower (see #1 above). Cover gigs were the "better joints" to play in and meant a career step up for newer artists, meaning you could now draw well enough to chance playing a gig on spec—gambling that your crowd would follow you, since the door was your pay.
Then, somewhere over the years, greedy or rent-panicked owners saw they didn't need to pay artists directly anymore & most started charging covers. Eventually some saw the cover as a revenue stream for themselves, as so many artists were banging them for gigs—et voila! A % of a now often hefty cover charge went to the house, along with not paying the band upfront, on top of charging higher prices for their food/beverage offerings. Add in charging separate cover charges per set, and it's a perfect storm keeping average customers away.
Solution: Artists need to take more control of the scenario; they need to band together and contemplate new ways to demand fair compensation for their efforts—including considering denying their services, if necessary, to create a fairer wage for the music—and a more tolerable price for the consumer.
But, as we all know of course, this is next to impossible to pull off. Which is ironic, as many places that musicians complain about the most for treating musicians so poorly would scarcely be able to survive w/o the music. They know exactly why & how they stay in business, and are not about to change unless they are directly forced to do so. Again, the core principle holds in music retail as it does in every industry that if a business cannot sustain itself w/o abusing its employees or contractors, pure economics say the business should go under. Also, if profits in any concern are being made by a collaboration of effort, the profit needs to be shared much closer to evenly.
3) The economy. Folks simply don't have money today. Polite avoidance is the standard citizen response to today's prices—where the once $12 entree now bounces off of $22, and the $6 glass of wine now runs $11. One trip out to impress the date, with no return, becomes the norm. No business can survive that way. Catering to those precious few who do have the funds and/or folks who are on that one-time binge meal is a fool's errand. We're in an era that needs an easier on-ramp, not a harder one.
A visionary needs to find a successful vehicle where passion and emotional satisfaction replace mere profit numbers and overwhelm the fear of the one-time event customer. That visionary will set the model which others in this copycat world can emulate, feeling safer as someone else has already succeeded—so why not them?
Another comment suggested correctly the need to shift the audience's view from the staid & expensive major venues to the exciting goings on at the smaller, more far-flung places around town—where these types of visionaries tend to emerge—which tend to be much less expensive, but almost totally unknown. That, of course, creates the need for a How. The fan needs to know somehow that a further trek on their part will, in fact, result in a more satisfying experience. But how to get the word out far and wide enough to be effective?l
That again brings up the "getting organized" model in order to survive. We constantly need to remember the general spot on the economic cycle society is in—not quite solid bottom, but too damned close to it—which confronts us with square, unfortunate realities. Many of us individually may be adventurous, but the average civilian fan which this music dearly needs may not be in a position to gamble his/her focus, time & money, hence the default trip to the overpriced jazz palaces once or twice a year. That's it.