I've been working restaurants and bars for quite a while and busking even longer. Whenever I make a demo or just a fun video I never in my wildest dreams thought about "paying" a spectator extra $$ for more exaggerated responses. Im not saying there's anything wrong with that per say. Just not my style. I met a buddy recently who's also a magician and he says he "always" gives a little financial incentive for an extra little scream from a spectator. What are your thoughts on this?

If we actually have the ability to entertain the spectators, it seems pretty silly to pay them to respond as if they've been entertained. Of course things are probably different for those who don't actually have the ability to entertain.

Greg

Not everyone has the amazing reactions that - very important - look good on camera. Also, people who have a camera on them, don't react the same. If you are a good entertainer, you could pull it off but probably will cost you time and maybe money to find those great reaction with the camera on. It's nothing wrong with faking reactions that you usually have.

Here is one of my promo videos: http://www.youtube.com/watch?v=BWo3Yeyf1yQ
To do it, I got at the venue some friends and friends of friend. I did a show for them and we filmed their natural reactions. Then we did some fake reactions when they had to act and filmed those too. Then we told a series of jokes and showed on the screen some funny clips. Also showed them and told them stuff that create different reactions. We filmed all of it with only ONE camera then used a mixture of all the bits but there is no reaction there that I don't get in my real live shows.

If you are using their response for your demo, then of course you can pay them to act it up a little. Might as well make it worth it for both parties, since your intention is to show off their response. They pretty much are your props for the video.