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Rights and Royalties

One of the many questions you should ask yourself when putting on a show is “Do I have the right?

By this, we mean the right to put on the performance, the right to use the music, the right to use any images, designs, choreography, etc. Basically, the right to use anything in the production that you didn’t create yourself.

The Cambridge Dictionary defines Rights as “the legal authority to publish, copy, or make available a work such as a book, movie, recording, or work of art”. The other term you will have heard is Copyright – which the Canadian Intellectual Property Office defines as “the exclusive legal right to produce, reproduce, publish, or perform an original literary, artistic, dramatic, or musical work”. So when you are asking for the rights to do something you are asking for the “legal authority” to include that “work” (script, music, image, etc) in your production. You are asking to enter into a relationship with the owner of the rights, a relationship where you both get something. You get the right to use their work, and they receive something in return – usually a fee, but could just be credit or something else. A contract makes that relationship official (and legally binding!).

Not securing rights to something is illegal as copyright is secured by the Copyright Act of Canada. Not only are civil penalties of thousands of dollars possible, but criminal offences could be determined, with hefty fines and potential jail time.

Royalties

A royalty is a payment made to the rights holder for the permission to use their property. It is usually a negotiated percentage of the box office revenue. For plays it is generally in the 8-10% range, almost always 10% for world premieres. For musicals it could be up to 12%. A term that is often used when describing the payment owing to a rights holder is “Advance Against Royalties”.

Advance Against Royalties is a negotiated amount that is paid to the rights holder in advance of the royalty payment, usually at signing of the contract. It is a guaranteed amount, meaning that even if the total sum theoretically earned from the royalty is less than what is negotiated for the advance, it doesn’t get reimbursed. For example:
You have negotiated a 10% royalty with a playwright, with a guaranteed advance against royalties of $5,000. That $5,000 can either be paid as a lump sum on signing, or split in some manner…maybe $2,500 on signing and $2,500 on the first day of rehearsal. At the end of the production 10% of the total box office revenue is $10,000. Since you have already paid $5,000 to the playwright, you would only owe an additional $5,000, giving a total of $10,000. If on the other hand 10% of the box office is only $4,000, you do not get reimbursed $1,000. The playwright gets to keep the full $5,000, even though in this scenario 10% of the box office revenue is only $4,000.

Royalties are paid to the person or organization that manages the rights of that particular property (script, music, image, etc). In the simplest scenario, you are negotiating directly with a single playwright, and the payment goes to that person. Often the playwright is represented by an agent; in that case, the payment would either go to the playwright or to the agency – the details of which would have to be specified in the contract. It can get more complicated if there are multiple creators involved, as is often the case with using previously recorded music (but more on that later).

Public Domain

If the work is in the Public Domain, it is free to use as much as you want. You do not need to ask permission or secure the rights. Use it as it is, change it up a little, make massive alterations – it’s completely up to you. The tricky part is figuring out what is in the public domain. The term refers to creative works to which no exclusive intellectual property rights apply. It may be that the copyright (or trademark or patent law) has expired, was waived at some point, forfeited, or never received copyright protection in the first place.

Why would a copyright expire? When you create something, in general that work is automatically protected by copyright laws the moment you create it – but not forever. The amount of time it has protection varies from country to country. In Canada, up until recently, it was for the lifetime of the creator and then for 50 years following their death. With the signing of the Protocol of Amendment to the Agreement between the United States of America, the United Mexican States and Canada (commonly called USMCA), the basic term of copyright protection in Canada increases by 20 years. That means that creative works don’t enter the public domain until 70 years after the death of the author. Canada has 2.5 years from the ratification of USMCA to enact this change. As of April 2021, copyright protection in Canada is still officially 50 years after the author’s death, but you should always confirm before assuming something is in the public domain.

Fair Use vs Fair Dealings

Another scenario where you don’t need to enter into a contract with a copyright owner is in a situation where Fair Dealing applies. This is not to be confused with the US term Fair Use (and unfortunately there is a LOT of confusion around this). In the US, Fair Use allows the copying of copyright protected material for a limited purpose, based on 4 factors:

  1. The purpose and character of the use
  2. The nature of the copyrighted work
  3. The amount or substantiality of the portion used
  4. The effect of the use on the potential market for or value of the work


If you’re interested in these, you can look them up for more detail, but the main argument you may hear from people wanting to use copyrighted material is based on the third factor – the AMOUNT of the portion used. “I’m only using a little bit” may be a defence in the US under Fair Use but it is NOT under Canadian law.

We won’t get into the nuances of Fair Dealing here, but the Copyright Act of Canada (section 29) states that it is for the purpose of research, private study, education, parody, or satire. That’s it. Even within that there are specific details – it can be complicated and extremely risky to rely on Fair Dealing, as the consequences can involve hefty fines and, in extreme cases, potential jail time. In other words, unless the material is in the public domain, assume that you have to secure the rights.

Securing Rights

Scripts

If you are trying to secure the rights to a previously produced script, the first thing to do is find who licenses it. If the script is published, the info you need is often stated at the front, on the copyright page. Most often the playwright uses an organization or agent to manage the rights for them, but sometimes you need to work directly with the playwright.

Here is a list of the most common licensing houses:


If you don’t have the script, or the script you have doesn’t list who to contact for the rights, try one of the following:

  • Connect with the producer of a previous production to see who they contacted to get the rights
  • Reach out to one of the licensing houses to see if they have insight
  • Go online and try to find the agent of the playwright (websites like Doollee have lots of info)


If you are trying to produce a script that hasn’t been produced yet, or hasn’t even been written, definitely reach out to the agent or the playwright. In many cases they will already have a template of an agreement that they can send you. If they don’t, PGC has good template agreements that they have created for their members.

Situation where the script has been developed by a group of artists – including but not limited to; the cast, the director, the designers, the choreographer, and others – is called a Collective Creation. Collective Creation was extremely popular in Canada in the 60s and 70s. In a Collective Creation, all participants generally split the revenue equally. As with everything, there are variations to this, but in general everyone shares everything equally, including decision making about future productions. This is because everyone in the collective is considered an equal business and legal partner. This can get complicated – in instances where there is disagreement about how to move forward, productions can stall. As a result, it is incredibly important that everyone in the collective agree on methods of conflict resolution. While everyone may be the best of friends, those friendships can be sorely tested if a clear path towards conflict resolution is not discussed right at the very beginning. Canadian Actors’ Equity Association has a contract called the Artists’ Collective Policy which governs Collective Creations for Equity members.

Music

Trying to secure the rights to music can be quite tricky because there are multiple layers that factor into the deal, including:

  • What kind of rights are you asking for?
  • Are you using a recording or performing it live?
  • How prominent is the song?
  • Is it being used in marketing?


If you are interested in new, original music, you will contract directly with the composer or their agent. The type of info that will be relevant here is how much music is involved and how you’re going to use it. For example, is this a full musical? If that’s the case, you’re looking at a full commission agreement with advance fees and a royalty, usually 12% of the box office. For one or two songs, or maybe some background music, either a fee per song or a lump sum amount for all the music created is standard. You will need to clearly state how the music is to be used in your contract (e.g., is it ok to use it in marketing material?) and what happens if the production is remounted.

Where things get interesting is when you want to use previously produced music, be it the actual recording, a cover, or you want to play it live. Previously recorded music has two sets of rights involved: Publishing Rights and Master Rights. The Publishing Rights are the rights retained by the creators of that music, the people that wrote it. The Master Rights (sometimes called Master Use Rights) belong to the recording company that created the recording. In the simplest case, both rights are managed by the same company. For example, the song You Send Me by Sam Cooke has both the Publishing Rights and the Master Rights managed by ABKCO Records. You would contact them and they would generate two separate agreements with you. But often it would be multiple organizations, such as in the situation with the song Piece of My Heart by Jerry Ragovoy and Bert Berns. The Publishing Rights are shared equally between Warner/Chappell Music Inc and Sony Music Canada Inc. The Master Rights are managed by Sony Music Canada.

However, if you don’t want to use a recording of the song but instead would like to perform it live during your show, or do your own recording, that means you would only need to secure the Publishing Rights. Because the Master Rights only deal with the recording, they would not be needed in this case.

As you can imagine, it can be quite complicated to sort through all of that. In the example above it is stated that Piece of My Heart is by Jerry Ragovoy and Bert Berns. That is often the first question you will have to answer: Who has the Publishing Rights? This song was made famous by Janis Joplin in 1968 but was originally recorded by Erma Franklin in 1967, and it has also been recorded by many others, including Faith Hill (1994) and Melissa Etheridge (2005). The reason this is important is that you need to know who wrote it (for the Publishing Rights) and which recording you want to use (Master Rights).

To find this information, start with looking at the credits on the recording you want to use. Publishing and Master Rights are sometimes listed there. Some of this information can also be found online on sites like AllMusic . If you are stuck, you can always reach out to Entandem, which is the company formed when SOCAN and Re:Sound merged. Entandem is the company in Canada that deals with music rights, and they have a database with a lot of Publishing Rights information. However, Entandem is not set up to address all your music rights needs. To understand why, you have to know the difference between Grand Rights and Small Rights (sometimes known as Small Performing Rights).

Grand Rights are the dramatic performing rights, which covers musical theatre works, operas, ballets, etc. These can encompass many copyrights, including the music and the libretto. That means that when you license a musical, you get the rights to everything, including the music, the lyrics, and the book. But included in Grand Rights, along with musicals and operas, are songs put into a dramatic setting where there is a plot, narration, costumes, etc. So that means that if you want to include Piece of My Heart in your play, you need to get the Grand Rights (this song is written into the script of THE HEIDI CHRONICLES which means that every time this script is produced, the producer has to secure the Grand Rights to the song). Endeavour, and other organizations like it around the world, do not administer Grand Rights. They only deal with Small Rights, which is when individual songs are played in concerts, or in a lobby, stadium, etc. If you are doing a concert, connect with Entandem and they will help you license it.

This whole process can be very time consuming, and there is no guarantee that the various rights holders will get back to you, especially in a timely manner. Give yourself as much time as possible to secure the rights – and make no mistake, you must secure the rights. With everything online now, it is very difficult to fly under the radar. One option to consider, if you have the budget for it, is to hire a music copyright clearing organization to look after it for you.

Finally, there are two other rights that may be relevant to you: Synchronization and Mechanical. If you are only using the music in your stage production, you won’t have to deal with these.

Synchronization Rights are needed when you want to use music as part of a soundtrack for some sort of audio-visual media, such as film, tv, video, commercial, web casts, etc. That means if you are hoping to use the song in a trailer that you would like to host on YouTube, you need to secure the Synchronization Rights when you are talking to the publishers.

Mechanical Rights are the rights to reproduce the music onto CDs and DVDs. As an example, if you do a concert and have secured a license through Entandem, you still have to talk to the publishers about Mechanical Rights if you want to make a CD recording of it.

Images

When you want to use a photograph, there are a number of places where you can secure the rights.

  • Directly with the photographer
  • Getty images
  • Newspaper publisher


It is important to be very clear about the intended use of the image and where it will be used. For example:
Will it just be used in the production or do you intend to use it for marketing purposes as well? If you are using production stills in the marketing, will the image be seen in the background?

Information for rights holders

There is some basic information that all rights holders will need to know . When trying to figure out an appropriate advance to ask for, a number of factors will come into play, especially those that will impact the gross box office potential.

  • Dates of the performance
    • This is important because they will want to know if there are any conflicts with any other productions.
    • The time of the year can also have a big impact on ticket sales so the rights holder will want to know if the production is happening over a holiday, during the dark days of winter, the heat of the summer, etc.
  • Number of performances
    • The more performances, the higher the revenue potential.
    • This is also a key factor if you are ever in competition with another producer to secure the rights. If one producer is willing to put on more performances than another, that will influence the decision on who gets to produce the show.
  • Venue
    • Larger venues have a greater box office potential than smaller venues…unless you decide you only want to sell a portion of the venue. For example, you may decide that you don’t want to sell any tickets in the balcony for the run of the show, thereby reducing the box office potential for the production. This is different than deciding that you don’t want to open up the balcony until a certain percentage of the orchestra level has been sold. In that scenario you are just impacting the timing of the sales, not the overall potential.
    • The venue is also important information as the rights holder may want to know EXACTLY where you are putting on their show. A larger city may have more potential than a smaller city, a downtown area may have more potential than in the suburbs, etc. While those assumptions may not be accurate for your production, they are fair questions to ask and it is up to you to explain your particular situation.
  • Ticket prices
    • The higher the ticket prices, the higher the box office potential. Fairly straight forward. But the level of detail they may request can vary from just the overall ticket range ($25 - $80), to the overall ticket average, to a full ticket breakdown.
    • They may also want to know if you are selling subscription or group sales discounts. While discounts mean less revenue, subscriptions and group sales generally result in an increase in ticket sales.


The level of detail that a rights holder will ask you to provide usually varies depending on the type of production you are putting on. For example, if you are producing a community theatre production (nobody is being paid), they will most likely want some basic details but won’t need too much, as they may not even charge a royalty. It’s possible they may only charge you a straight fee per performance. If you are putting on a professional production, either as an independent producer or as part of a venued theatre company, it is normal for them to ask for more detail but they don’t generally ask for a full breakdown of everything. For commercial theatre productions, they may want to know everything with full breakdowns of sales plans to marketing budgets.

When securing the rights to music, it is fairly common for Publishing and Master rights holders to want to know what you are paying for other similar rights to make sure that they aren’t getting paid less than the others and are very upfront about that. They may also ask you what your budget is for your music budget, or your overall production budget.

Something to note is the difference between two terms: Gross Box Office Potential and Net Box Office Potential. At the most basic level, the difference between them is tax. Gross includes all the money collected while Net removes the tax. Naturally, it can be more complicated than that. Some industries allow for further deductions from the Gross, such as facility fees, service charges, commissions, and even ticket printing costs. It’s important to know what is allowable in your situation.

Distinguishing whether the royalties are a percentage of your Gross or Net Box Office Potential is very important as it can be a rather large difference in the bottom line. In most situations you can base the percentage on the Net Box Office Potential (Gross, minus the taxes) but often you can also deduct facility fees and service charges as that is money that the Producer never sees. It goes straight to the venue and ticketing company. But it is all a negotiation.

Negotiating, timelines, and contracts

Keep in mind that royalties related to all rights discussed so far are negotiable, from percentages paid to advance – with the exception of anything that is specified in a collective bargaining agreement, such as royalties stated in the Playwrights Guild of Canada world premiere contract – but even that is technically negotiable during the collective bargaining negotiations between PACT and PGC. If you feel strongly about anything in those agreements, get involved. Talk to PACT. Share your thoughts. Get on one of their committees. Get involved early so you have time to be heard.

Speaking of timelines, everything with regards to rights takes time. And sometimes a LOT of time. So make sure you give yourself plenty of time to find who manages the rights and to negotiate the deal. That being said, time is often a luxury, especially if music decisions are not decided until in the rehearsal hall. As a result, you need to make sure your director and music designer know that if they don’t figure out their music requirements ahead of the rehearsal process, there may not be enough time to secure the rights to use them. And even then, there is never a guarantee. In other words, plan as much as you can, as early as you can!

Lastly, make sure everything is written clearly in a contract, and review the contract periodically. You definitely do not want to undo all the work you have done because something in the contract was inadvertently missed.

All this will put you in a situation to succeed, and ensure that all the artists whose work make up your show are being credited and paid appropriately.

Additional resources

  • Providing credit for artists work is important. Read "Design Credit Where It's Due" on American Theatre's journey to acknowledging designers when using production photos for their articles.
  • 8 Facts about Canadian Copyright Law is a must-read, especially the section on Moral Rights, which protect the author of a work in three ways (Paternity, Integrity, and Association).
  • 10 Myths about Canadian Copyright Law debunks many common misinterpretations of Canadian copyright law, including Fair Use and the protection of ideas under law.
  • Music Rights Tip Sheet from the Associated Designers of Canada (ADC) is a free, downloadable comprehensive guide to the different types of music rights in Canada.
  • Do you require legal support, or have more specific questions on copyright and Intellectual Property for artists? Check out our list of Legal services for answers!

Created by admin. Last Modification: Wednesday July 28, 2021 11:44:48 EDT by kpalm.