Broadway Profits- Page 2

[bwayfan7000]

Posted: 1/2/12 at 2:21am

I always am entertained by the "soundtrack" vs. "cast album" debate. Whenever I hear someone say, for example, "the Wicked soundtrack", I often ask them to think about what exactly it is that they are saying. Where in Wicked would they use a prerecorded sound track? I think that no one should be offended if a correction is made on this front because it's simply the correct term. And, for anyone that reads this board, it's a distinction so often made that joking about it is inevitable.

[temms]

Posted: 1/2/12 at 4:45pm

I hesitate to get into a back-and-forth, but...

Investors do, in fact, as a rule, get part of the profits for merchandising. And cast albums. It's true that it is unusual for the producing entity to also take on the producing of merchandise or the recording of albums (though it does happen), but whether the producing company is making the goods or not the author is making money off license/royalties and the producing company is getting a piece of that subsidiary income.

Subsidiary rights are a part of the Dramatists Guild Approved Production Contract for Plays and Musicals. Not everything is produced under that contract (it's not standardized like the Production Contract for Equity, for instance) but I can't imagine a scenario where a producer would ask for less favorable terms than the Dramatists Guild themselves recommend, and they recommend a 40% share of subsidiary rights.

When the cast album is made, the composer/writers receive mechanical royalties. That's subsidiary income that the producing company shares in. Same with merchandising. Subsidiary sharing is a lucrative part of commercial theatre investing.

I can't imagine any sophisticated investor (which you must be to invest in Broadway shows, there are criteria) would put their money into something where there was no sharing of subsidiaries.

[vegas2]

Posted: 1/2/12 at 4:58pm

Thank you for those details, temms.

[temms]

Posted: 1/2/12 at 5:17pm

I'm actually going to clarify what I said above, since I happened to have a copy of the APC on my shelf and I hate to spread misinformation (it's published in Donald Farber's "Producing Theatre: A Comprehensive Legal And Business Guide"). Section XI of the APC specifically pertains to subsidiaries. They are defined as:

Media Productions, Audio-Visual Productions (including "Soundtracks" as well as movies, TV, DVDs thereof), Commercial Use Products (wearing apparel, toys, games, figures, dolls, novelties, books, souvenir programs and any other physical property representing a character in the Play or using the name, character or the Title of the Play or otherwise connected with the Play its title), Stock Performances, Amateur Performances, Ancillary Performances, and Revival Performances. The percentage share and length of time differ for each category.

Cast Album and Merchandising get their own paragraphs. To quote:
"Section 22.03 Cast Album. Producer, with Author's consent (not to be withheld unreasonably), is hereby granted the exclusive right to contract for the disposition of the rights to make Cast Albums of any and all Companies presenting the Play hereunder. The proceeds received by Producer from the disposition of the Cast Album rights, after deduction of such sums...[snip about a lot of technical deductions]...shall be divided 60% to Author and 40% to Producer."

And Merch is "Section 11.05 Producer's Right Regarding Commercial Use Products. (a) ...Author hereby grants to Producer the sole and exclusive rights to create, manufacture and sell (or have created, manufactured and sold) Commercial Use Products, during the time that Producer retains any rights to present the Play hereunder...[snip for very technical legalese]... Producer shall pay Author the following amounts, regardless of when paid, in connection with each contract entered into for the exploitation of Commercial Use Products:

(i) with respect to sales of such products on the premises of theatres in which Producer presents the Play, a sum equal to 10% of the gross retail sales (after deduction of taxes);

(ii) with respect to sales of such products in other locations, a sum equal to 50% of Producer's net receipts from such sales (...less customary third party costs actually incurred in the creation, manufacture and sale of such Commercial Use Products."


So I was a little off above - producers do share pretty directly as per the contract, but it is true that these provisions are not sacrosanct and subject to some negotiation.

[metsfan]

Posted: 1/2/12 at 11:55pm

Temms is still right and Ghostlight is still wrong. Yes, there are no absolutes. And yes, everything in the APC is negotiable. But those provisions have to be approved by the DG, hence the "A" in APC. And producers (acting for the investors) are loathe to give back. So when we see, thanks to Temms, that the standard language of the APC template gives producers participation in both merchandise and the OBC, therefore "as a rule" producers (and thus investors) do participate.

Before anyone asks, when the APC says "producer" they mean the LLC contracting with the authors for the production. All those who invest in that LLC participate as part of the "producer."

And we're all aware, of course, that even the Equity Production Contract is negotiable in that producers can ask for and often receive dispensations of all sorts.