I read the guides at Carl's, and have a band of 2 sims who live together. Even at level 1, when they noodled around in the park they'd get small tips. Now that they are level 6-7 in music, have 20-40 compositions performed each, they've had a gig, they've jammed with a 5-star celeb, and they made $30K in one evening in the subways playing for tips separately.
That's so much money it's not even fun, so I tried to get them to progress in the Band career by jamming outside the theater on a Saturday night. They played all night long, attracting about 6 or 7 sims who stood around reading books! I stopped and started the music a few times, like Metro has suggested to get the npcs' attention, but nothing worked. My band got not one single tip for jamming in a prime location and time.
What did I do wrong? Oh, and the musicians were grouped with each other.