Usually this blog just deals with facts and dates of WCT shows but a post on another blog needed a response and this is a good place to do that. A little public education in the economics of theatre.
Seth Godin is a marketing guru and proposes an interesting idea for theatres in his post, Organizing Customers. The short synopsis is a local high school group did a production of Grease and paid $3000 for the royalties. Surprised at the high price tag, Mr. Godin suggests that theatres form a cartel to negotiate for significantly lower royalties. Interesting idea but first lets get some theatre facts involved.
- While Grease first opened in the 70's. it had a recent Broadway revival which increases its desirability for production. It has always been a very popular show and so the royalties will be higher for this show than for a less well known musical. And a producer will sell more tickets because the audience knows and wants to see Grease.
- The was no mention of the number of performances for this production but that was a factor in charging the $3000 royalties. The royalties for WCT's next show, Love Letters, are $75 a performance. Musicals are higher.
- Also a factor is the size of the theatre used for the production. The larger the theatre the higher the royalty.
- That $3000 probably includes script rental. Unlike plays where the scripts are bought and kept by the theatre/cast, musicals are generally used and returned. So for Love Letters, about $45 was spent on scripts. This can be a huge cost with a large cast since you have to have a script for each cast member.
- How much of that $3000 did the school get back when the scripts were returned. Part of the rental fee is a refundable deposit. For a recent musical, WCT received back @ $400 of the royalties when the scripts were all returned.
Mr Godin suggest theatres joining together to negotiate for lower royalties.
Imagine contacting 3,000 high schools and finding 500 willing to join
together and agree to act as a buying cartel. Now, the organizer can
poll the directors at these schools and find thirty plays they'd be
willing to put on next year. Go to the rights holders of these plays
and say, "We're going to pick six of these plays. Each of the six will
get a huge number of customers as a result, perhaps twenty times as
many as you usually get. But to be among the six, you need to lower
your price by a factor of ten."
For this to work, the cartel will have to choose shows that are not getting produced often. No publisher is going to cut the royalty of the top seller. There is a reason they aren't getting produced as often, lack of interest. Directors aren't interested in presenting or the audience isn't interested in seeing. Choosing a season is hard enough without having to choose from a reduced set of shows. And everyone in the cartel will be choosing from the same set of shows. Two theatres in the same area choosing the same shows is not good for either theatre or the potential audience.
Are royalties high and could theatre's band together to reduce them. Yes. The national organizations could work out discount deals with publishers for royalty reductions. Much like AAA has negotiated discounts with hotels for their members. But the savings will not be the 90% Mr. Godin suggests. However, I think most theatres would go for even a 5-10% reduction.