The article in today's NY Times regarding future royalties from new plays produced by not-for-profit theaters addresses some important questions affecting the life of theater as we know it today. The discussion of who should share in future royalties of a property has been around for a long time and has valid arguments on both sides. Let's examine some.
From the writer's perspective, it is a blessing to have your work produced and many will do whatever it takes to get their work on stage, including giving away much of their future royalties. The commercial producer vests their interest in what is called 'subsidiary rights' over an agreed upon number of performances. As an example, a Broadway production can earn up to 40% of the writer's subsidiary royalties if the show runs say 56 performances on Broadway, but if it only runs 16, the percentage would be significantly less. This arrangement incentivizes the producer to help the show run longer and protects the writer should the show have a short run. The argument is that the longer the run, the more 'valuable' the property becomes as a licensable show. The not-for-profits don't have the same arrangement because their productions are most often sold to subscriber based ticket purchasers. The runs of their shows are therefore a guaranteed or limited length of time. So the not-for-profits get a guaranteed percentage of the subsidiary rights up front for producing the play or musical.
The risk taken by the commercial producer is what enables them to ask for and get subsidiary rights participation from the author. After all, a commercial production will greatly enhance the notoriety of a production and bring it value that had not yet existed. Writers argue that although there is a great risk involved, if the producers put up a poor production, they can just as easily damage the value of the property as enhance it. (That argument is paramount in the discussion of who should own the publishing rights to a musicals songs, but that subject is for another post.)
As Joy Goodman notes, since the mission of not-for-profit theaters is to produce work and, they raise money to facilitate that mission, there seems to be a disconnect with requiring playwrights to support the not-for-profits by giving up future royalty participation. But, on the other hand, why shouldn't they get something in return for their efforts to promote the work of a playwright. In the film business, there is a saying, you don't make money on your first movie, it's the second third and, so on. So, would it be going to far to assume the same for playwrights? If a young playwright has a success with one play, it is logical to assume that theaters and producers will be very interested in producing his or her next play. If the playwright has good representation, they will then be able to make better deals going forward. I believe that the relationship between the creative artist and the producer, whether for profit or not, is symbiotic in nature and needs to be treated as such. If one side benefits, the other should as well. There is no correct answer to these questions. They will persist to inform the way plays are developed in the US and around the world.
I propose the creation of a not-for-profit fund which has one mission, to support theater writers as they create new work. How could that be achieved? In the same way that a commercial producer brings enhancement money to a not-for-profit theater to help produce a production the producer hopes to bring to Broadway. The difference is that the 'enhancement' money would reduce the not-for-profits financial burden in supporting a new work, and therefore, allow the playwright to retain a larger percentage of his/her subsidiary rights. If not all of those rights. But then with the decision of the Center Theater group to no longer require any subsidiary rights participation going forward, perhaps this wont be necessary as other theaters follow suit.