I tend to be skeptical of "battle of the bands" contests in the physical world. There's often an entry fee to participate, which basically means bands are paying to play in some sort of showdown showcase. Often there's no quality gate--if you can afford the entry fee, you're in, and that means that the only people in the audience are other participating bands. The prizes tend to be loaded with catches, like a "recording contract" that forces you to sign over your publishing rights to the organization sponsoring the contest.
But it appears that some online competitions are actually worthwhile. The other night I took a look at OurStage, which launched in September. There's no fee to enter, and artists retain full rights to their music. The prizes are worth competing for: winners of each monthly contest can take home $5,000 in cash, win mentoring sessions with music industry folks, and even earn slots at festivals people actually care about like Bonnaroo.
From a fan's perspective, the voting interface is excellent, and the company claims to have taken pains to make it hard for artists to game the system--you're seldom asked to vote on the same act twice, and never asked to vote on the same head-to-head matchup. After spending a couple hours with it, I can say that the artists on the site compare favorably to Garageband.com, a very similar service that later spawned iLike, a social-networking service for discovering and recommending music.
Still, OurStage suffers from the same problem that I experienced with Garageband.com: there's not much incentive to keep voting. I like to hear new music, but of the 20 or so songs I sampled on OurStage, only three were interesting enough for me to listen all the way through. I can't imagine that casual music fans will spend a lot of time listening to unknown bands on the site unless OurStage offers some incentive--say, a chance to win free downloads from big-name artists, concert tickets, or other prizes.
The other problem: lax enforcement of genres. I like experimental music, but found lots of other types of songs in that category, including Christian guitar rock, hip-hop, and jazz-pop, all of which would fit better into other genres. I imagine these artists thought it'd be easier to win in the experimental channel than in the more popular channels. I guess they didn't expect any Moonchild fans to check them out.