Next, hit songs. And finally, star quality. The primary methods of finding new talent are pretty much what you would expect. Word of mouth is the first and foremost way in which artists are discovered. They also attend showcases, although I was surprised to learn that many of the reps don't value showcases any more than they do regular club gigs.
Showcases are a cousin of playing in clubs.
Fewer artists are signed in those situations than through word of mouth. But the positive thing is that if you're playing in a showcase, you already have enough of a buzz in your local market. The labels probably know about you. They rarely see anyone that they haven't heard anything about. At a showcase they get to see how the six bands they've had their eyes on fare in that environment.