They start chatting.  When Danny finds out she is a singer he becomes interested.  After Kate has sung for him, he is persuaded to go to her gig at a seedy London club [Give Me An Inch].  After seeing her perform, Danny sets about persuading her that she should ditch her band and that he should be her manager.
However, Kate is insistant that she doesn't want a manager as that would be conforming with the machine. 
"Do you want to sit outside toilets for the rest of your life"
After the gig Danny persuades Kate to drop her dead-beat band and sets about helping her to recruit a new one. Unfortunately, the newspaper advert goes out a week early and Kate is woken up early one morning by a stream of hopefulls. 
Most of them are awful, but the sax player Ken (Jonathan Pryce) is brought in despite being half deaf and a herion addict.