I run a weekly local tournament. I do the payouts as follows: I pay one spot for every 4 people in it. Say there are 16 people one week, I pay 4 spots. 1st:40%, 2nd:30%, 3rd: 20%, 4th: 10%.
I have never really cared for top heavy payouts. I don't believe they are fair, and don't really promote others to come back. Let's say you play "John" first round and lose to him. You go all the way through the losers bracket to play in the finals. In the finals, you lose on the hill, and your opponent slopped out on the hill. How do you like him getting paid twice or more than what you do for slopping out and only having to beat about half the guys you had to? Why should one match be worth twice what the next payout is?
The only real reason I see to have it top heavy is to advertise a large first place payout....basically to "con" as many as possible to chase after that 1st place prize. Which, really, is rather ridiculous because more often than not the top two are splitting anyways, whether you know about it or not.