If you are playing an acoustic in a rock setting (i.e., with drums on the same stage) then you either use a pickup, or you are not heard. It really is that simple, as any mic put on your guitar is going to pickup more drums than it is guitar. I have done sound for people who have great mic technique, and it sounds great, right up until the moment the drummer starts playing. As soon as the drums come in, you can not hear the guitar.
It is absolutely possible to make an acoustic pickup sound good. I have heard it, and I have done it. It does not sound as good as a mic in an isolated room, but it sounds much better than not being able to hear the guitar.
The other issue, for many players, is consistency. For instance, Leo Kottke is a customer of ours, so we have spoken to him at great length about pickups and guitars. He uses pickups (usually a Sunrise, but he is constantly experimenting). He uses pickups for much the same reason he uses Taylors. He is in a different town 200 nights a year, and he has a different sound guy every night. A mic requires a great deal of skill on the part of the engineer to make it sound good, and he can not trust that he is going to get someone with that skill. By using the pickup, he is assured of a consistent sound every night, without fail. This makes up for a lot in his mind. He plays Taylors for much the same reason. About once every two years, the airlines lunch one of his guitars. When he was playing custom, vintage, or otherwise irreplaceable guitars, he was always worried about this. With his Taylors, he can get the exact same guitar in just about any town anywhere in the world, on extremely short notice. This makes up for any lack the guitar may have.
It takes some work to make a pickup sound good, and you will never get it by just plugging it straight into an electric guitar amp. It still takes less work, and sounds better in many situations, than a mic for live work, or at least for all of the live work I am involved in. If you are in an acoustic setting, such as a bluegrass band, then mics make a lot of sense (providing you have the mic technique, and most players don't), but for rock and roll, they just don't cut it.
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