Backstage Series: Behind the Scenes #1

Hamilton Players’ Backstage Series

This post begins our ongoing Backstage Series, where we pull back the curtain on how community theatre really works behind the scenes.

Behind the Scenes #1 - Royalties and Licensing

One of the largest behind-the-scenes expenses in live theatre is something many patrons rarely think about: royalties and licensing.

When Hamilton Players produces a show, we are not simply choosing a title and putting actors on stage. We are legally licensing the right to perform someone else’s work. Every musical and most plays are protected by copyright, which means we must receive permission and pay for that right before the curtain ever rises. Licensing is handled by theatrical agencies such as Music Theatre International, Concord Theatricals, and Dramatists Play Service. These organizations represent writers and composers, ensuring artists are compensated when their original, copyrighted works are performed.

How Are Royalties Calculated?

It may surprise you to learn that royalties are not a flat fee, and are not based on how many tickets we actually sell. They are typically calculated using what is called Gross Potential Box Office. This figure is determined by:

•  Our highest ticket price
• The number of seats in the theatre
• The number of performances

In other words, royalties are based on the maximum amount we could earn if every seat were sold at full price, not on what we actually make. From there, the licensing house applies a percentage set by the show's creators. For musicals, this often ranges from 10 to 15 percent of the potential gross. Most contracts also include a minimum royalty per performance, which guarantees the authors' compensation even if attendance is low.

Why Do Some Shows Cost More Than Others?

Not all titles are priced equally.

Large, in-demand musicals such as Hamilton or Wicked, which are not currently available to amateur or community theatres, would command significantly higher royalties than smaller or older titles. A classic like My Fair Lady carries a different rate structure than a contemporary one-person play such as White Rabbit Red Rabbit. Demand, cast size, orchestration requirements, and the specific contractual agreements negotiated by the authors all influence pricing.

And That Is Not All

Royalties are only part of the licensing expense. Theaters also pay for: 

• Script and score rentals. We are required to purchase or rent a minimum number of scripts and librettos. We cannot purchase one and photocopy it.
•  Orchestra parts. Musical scores are rented and must be returned after the production closes.
• Performance or rehearsal tracks. These are professionally recorded orchestrations used in place of, or sometimes in addition to, live musicians.
•  Logo packages. These are officially branded marketing materials required for advertising the show.
• Streaming permissions, when available. It is generally illegal to record or stream a licensed production without explicit permission. Streaming rights must be separately licensed and are not available for all titles.
• Archival video rights, if permitted. This allows the production to be recorded for internal purposes only. It does not allow public posting or sales. In some cases, contracts allow cast members to receive a personal copy.

All of these expenses and restrictions are clearly outlined in the licensing contract we sign.

Speaking of Contracts

In addition to securing a licensing contract to perform a show, we must have that contract approved and paid in full before we can announce a season or hold auditions. For Hamilton Players, royalties typically range from $2,500 to $7,200 per production. That amount must be paid before a single ticket is sold.

Why Royalties Matter

Royalties ensure that playwrights, composers, and lyricists are paid for their work, just as authors are compensated when someone purchases their book. When you buy a ticket, a portion of that purchase goes directly back to the creators who made the story possible.

It is one of the many invisible investments that allows community theatres to legally and ethically bring Broadway and beyond to the Hamilton Playhouse.

Royalties may secure the rights to perform a show, but the contract determines how it must be performed. In our next Backstage Series post, we will pull back the curtain on the creative boundaries that come with licensing a production.