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The live music scene in Chiang Mai is quite good for a town of its size, but you need to know where to go since the best places are a bit spread out and less well-known.
The most famous places are Riverside and Good View, on the river. Riverside has young, energetic rock bands and the place gets very packed out on the weekends with Thai teenagers. Good View has pop covers, very slick and professional but it gets very boring very quickly. Both these places are very popular but not somewhere to go for good music.
North Gate is well-known for jazz and is a bit of a polarising place. Some people love the wild and crazy jam sessions on Tuesdays while others totally hate it, saying that its boring, unimaginative and even silly. You have to check it out at least once and decide for yourself! Music on the other nights of the week is more conventional.
A better option for quality music is a new place on the river, The Bear Bar. They have a wide range of different musical styles, from acoustic to latin to jazz & blues, and specifically aim to be a serious music venue. They offer quite good food and cocktails and while many of the bands also play at North Gate, the overall experience is much better.
If blues is your thing, The Brasserie (near Good View) is a well-known and long-time blues venue. The main guitarist, Tuk, is an amazing player but it's hit-or-miss whether or not he will be playing on any given night. The supporting band is great, so even if Tuk is not there, you'll see some quality music. Boy Blues Bar is another option, upstairs at the Night Bazaar. Boy has been playing around Chiang Mai for many years and is a lovely guy and a great musician. It's a very simple bar but the music is excellent.*NB: The Brasserie may be in a new location. Verify before you go.
For reggae and rock, go to the old Boon Yoo market, near the Irish Pub on Rajawiti Road. There are a couple of bars all in the same area that rock on late into the night. The music can be a little rough some times but it's a great place to party.
There are also many bars in the Nimmanhaemin Road area but these mostly cater for Thai customers. Warm Up and Monkey Club are the best known and are typical Thai places, where a group of friends will sit at a table, crack open a bottle of whiskey and share it over snacks. The bands play Thai pop covers and are very professional but ultimately, there as background music. The Drunken Flower is an exception, it's a small intimate cafe where small acoustic acts play on the weekends.*NB: The Drunken Flower is reported to have another name, since years ago ( assuming you mean the bar at the far end of Nimmanhaemin Soi 1). Verify before you go.
The Inter Bar has great bands, the main one coming on at about 9pm, the guitar work is superb. It is on the Tae Pae Road not far from The Tae Pae Gate. Good atmosphere and great selection of cocktails.