One response that I have gotten several times when I describe Music Factory to someone who isn't a musician is, "so...it's like a big jam session, right?" That's actually a great question, since jam sessions do have interesting features from a economic point of view, which can help us to unravel some of our assumptions about music.
First of all, it is not the case that Music Factory is a jam session, strictly speaking. To state the most obvious differences: 1) jam sessions are typically open-invite situations, whereas Music Factory is curated; 2) jam sessions start and stop, drifting through a variety of material, whereas Music Factory is a single continuous performance; 3) musicians play at jam sessions for fun, whereas in Music Factory they are also being compensated by the audience.
So why does the question even come up then? In short, because improvised music first came into its own (via modern jazz) in jam sessions. We tend to forget that in the Swing Era, most musicians made their living playing dance arrangements – before the age of electronic sound systems, if you didn't go down to the union hall and find people who knew how to operate musical instruments and read charts, you didn't have music in your venue, period. The popular bands of the day had soloists, and some of them were great improvisers, but it was typically after the gig, when they weren't being paid, that musicians did most of their soloing. For instance, it is well known that bebop was developed collaboratively, after working hours, by the people who came by Minton's and Monroe's Uptown House to jam (Minton's apparently did provide free food to the musicians).
When Norman Granz and other music producers of the forties discovered that a lot of people would rather hear the extended improvisations, not the corny dance arrangements, it was a revelation. But it may not be an accident that improvised music came into its own outside of its creators' professional roles as card-carrying union members. If improvisation is mastered through enjoyment, the moment when one is playing for fun instead of profit may be crucial. And while playing for fun and profit simultaneously isn't outright paradoxical, it does introduce a creeping overdetermination. After all, nothing can undermine enjoyment like it being your job. Granz's Jazz at the Philharmonic concerts, while epic, did take on shades of a sort of parody of enjoyment after a while, with predictable crowd-pleasers like trumpet high notes, saxophone effects, and hectic drum solos becoming increasingly mechanical.