There's only two types of music not subject to royalty fees - original music and classical music, the latter of which is public domain.

That $200/month figure is probably a breakdown of a $2400/year annual fee. I play lots of places and they all pay their ASCAP/BMI/SESAC performance fees for live music. One club told me they pay about $1500/year in fees. The agency rep then told then they had to pay additional fees for having the TV on in the lounge to cover music coming from that - the club refused on the grounds that since they have live music the TV is usually muted... the rep bought that answer.

That thing about non-union bands and being blackballed only happens in areas where the unions have some muscle, like in the Northeast. Here in the Southeast we live in "right to work" states where the union has no authority so noone cares about the union, musician or employer.