Copyright law treats music written, performed, and recorded for the purpose of live theater and drama differently than other music. Common examples of such music include operas, music for Broadway and other musicals, and “incidental” music written specifically to be used during plays.
The Dramatists Guild of America, a voluntary professional organization formed in 1912 for playwrights, composers, and lyricists working in U.S. theaters oversees the administration of contracts and rights associated with theatrical music. (Note that, despite the use of the name “guild,” the Dramatists Guild is not a labor union.) Among its functions, the Dramatists Guild publishes an Approved Production Contract (APC), suggesting the acceptable terms that govern the rights among composers, lyricists, and producers involved in theater productions. The typical agreement in modern musical productions involves the concept of a profit pool, under which the producer, composer, lyricist, director, and others who are paid royalties from the show are awarded a weekly guarantee during the run of the show, together with a share (typically 40% total) of the net operating profits (as opposed to a gross percentage plan). The other 60% of the net operating profits are then paid to the show’s investors, providing a greater incentive for the speculative investments needed to finance a theatrical show’s many production costs (actor pay, scenery design and construction, lighting, venue rental, costumes, etc.).
Grand Rights and Small Rights for Dramatic Performances
Copyright law recognizes a distinction between what are known as “small rights,” those associated with most nondramatic music performances, and “grand rights,” those rights associated with the performance of music within the context of dramatic or theatrical productions, such as plays, operas, ballets, musical theater, etc. “Grand rights” are often referred to as “dramatic rights.” This distinction between “grand” and “small” rights is not codified into the U.S. Copyright statutes themselves, but rather has developed as a matter of practice in the way musical copyrights are administered by publishers, theatrical agencies, and performance rights organizations.
In order to perform, record, or otherwise use music covered by the “grand rights” associated with a dramatic performance, a producer will need permission from the rights holder (typically the publisher) as well as a negotiated licensing (“rental”) fee for the particular performance in question. Similarly, if the producer wishes to adapt a pre-existing non-dramatic musical work for a new dramatic work, that will likely convert what would otherwise be a “small rights” performance into a “grand rights” performance requiring permission and potentially a licensing fee. For example, if a producer wasn’t to incorporate an existing pop song into a play, she will not be able to rely on the compulsory performance license that a concert performance of that song would enjoy; instead, she would be required to contact the copyright holder of that song and request specific permission for its use in the play, and then pay any licensing fees that she negotiates for the use.
The performing rights organizations we discussed above administer only the royalties from “small” performance rights, that is non-dramatic rights. In order to license music for dramatic purposes, the producer of the dramatic work will have to seek a license and pay any associated licensing fees directly from the publisher or other copyright holder of the work. The license fees charged by the publisher/writer will often vary depending on the context. For a small production of limited duration in a small venue, a one-time flat fee would often be appropriate. However, for an extended theatrical tour or a large-venue run with significant ticket revenue potential, the publisher will often request a percentage of ticket revenue in order to scale the licensing fee to the financial results of the performance.
Dramatic and Non-Dramatic Uses of Music
The distinction between a dramatic versus a non-dramatic use of music is not always easy to make. In general, two categories of dramatic uses of music implicate the attribution of “grand rights”:
- Music with words woven into and carrying forward the plot and accompanying action of a theatrical performance. Examples of this type of dramatic music would include a song written for a character to sing in a Broadway musical, such as the song “Memory” from Cats.
- Pre-existing or commissioned music adapted for use in a dramatic context. For example, a pre-existing popular song might be adapted for use in a new Broadway musical, such as the use of ABBA’s “Dancing Queen” in the musical Mamma Mia. Or music might be commissioned for a theatrical play (known as “incidental music”) to set the mood for certain scenes in the play.
The distinction between “grand” and “small” rights becomes even more difficult when only part of the work is performed or when a work from a dramatic production is performed in a non-dramatic (or even a less dramatic) context. The distinction hinges on whether the portion of the work, or the context in which the portion is performed, conveys a significant portion of the plot of the original dramatic work, or whether it functions only as a non-dramatic musical performance without attempting to convey the plot of the original dramatic context. A few examples will help clarify this distinction:
- A performance of a single aria (song) from an opera in “concert” form (without sets, staging, or costumes) would not require “grand rights” permission because it does not convey enough dramatic or plot information. It would be considered only a “small rights” performance, similar to the performance of a pop song.
- A performance of one opera aria, however, would likely require “grand rights” permissions if the singers are in costume, with staging and scenery accompanying the aria such that the plot associated with that aria is conveyed to the audience, even though it is only a single piece from the opera.
- Similarly, performance of an entire opera in “concert” form (or a significant proportion of the opera), even without costumes and sets, would still convey the full meaning of the plot through the music, so it would be considered a dramatic performance which would require “grand rights” permissions.
- An orchestral performance of the music from a ballet, such as Copland’s Rodeo, but without the accompanying dance would not be considered a dramatic performance because the plot and drama are carried primarily through seeing the dancers on stage. The music alone would not be enough to trigger “grand rights” permissions.
Original Cast Albums
In addition to ticket revenue, an album recorded by the original cast of the production often represents an important source of revenue for music theater, particularly the large Broadway shows (such as Cats, Hamilton, Rent, etc.). These original cast albums have historically been among the most commercially successful recordings of all time. For example, the original cast album to the musical Hamilton, released in 2015, reached No.1 in the U.S. rap album charts and No. 3 on the overall album charts. Other even more successful original cast recordings include those for Les Miserables (1987), Wicked (2003) , and Phantom of the Opera (1988).
The producer of a theatrical cast albums receives a much higher percentage of royalties than for a standard (non-theatrical) music album. The total royalty rate paid from the record company will approach what the featured musicians would receive for a standard music album — 12% to 15% — but the theatrical show’s music composers receive only about about 60% of that, with the producers getting about 40%. By way of comparison, a music album producer typically receives 3% in album sales royalties. This difference reflects the much larger list of duties and responsibilities borne by a theatrical show producer, who must also deal with multiple casts, stage crew, live musical performances, lighting, costumes, etc.
Theatrical shows also offer many opportunities for what are known as “subsidiary rights,” or opportunities for income after the initial “run” of the show and the accompanying cast album. Those subsidiary rights include later revivals of the show (including increasingly popular national tours with multiple casts), amateur productions of the show, movies that may be made of the show (such as the recent Cats movie in 2019), soundtrack albums, and merchandising.
Amateur productions of musical theater shows, such as in schools, offer a long and continuous source of revenue for successful theatrical productions.