HOW DOES A MUSICAL GET FINANCED?

Thinking about producing yourself? Wondering what makes producers tick? Looking for financing for your new show? Theatrical Attorney/Producer Gordon Firemark will walk participants through the process of financing plays and musicals. The program will explore sources of funding, typical business structures and the attendant legal requirements and restrictions associated with financing a show.

Two Tuesday evenings, 7-10pm

August 10 & 17

For information or to enroll, CLICK HERE

Well, this is often very attractive to the client, as it helps them climb the showbiz food chain.  In fact, many folks in the entertainment industry view credit as more important than compensation, in the short run.  By taking a ‘higher’ credit, they’re establishing precedent, so their next job can be at the same, improved credit and they can earn a more appropriate fee.

But accepting a producing credit is not without its perils.  In preparing to teach my Theater Law course, I was reminded of a case in which a party who bargained for “producer credit” and got much more than he bargained for… a lawsuit.

In Redgrave v Stuart Thomson Productions (NY, 1999, unpublished) ,  Actor Corin Redgrave was  injured when exiting the stage in the dark.  He sued the producers and the  ‘General Manager’ of the  of the show for damages.

(The General Manager is the producer’s front-line operative in the production of the show.  Responsible for the day-to-day administration  of the production, the GM will, in consultation with the Producer(s),  of course,  supervise  the preparation of a budget for the show, along with the activities of the accountants, press agent, Company Manager, box-office,  advertising, marketing, promotions, contract negotiations, staffing and personnel matters, and any other business matters that may arise.)

You see, Thomson had, in addition to his fees for General Management services, received a co-producer credit for the play as well.     So, in ruling on Thomson’s Motion for Summary Judgment, the Court refused to dismiss the case because there was  an issue of fact as to whether  Thomson’s credit made him a partner in the production, and therefore liable for Redrgrave’s injuries.

So, in evaluating an offer that includes a producer credit in lieu of some or all of the compensation a party would otherwise seek, it’s important to consider not just the career benefit, but also the risk involved with being credited as a producer.

Now, at first blush, this might seem a simple  issue, but it’s actually rather complex.  The parameters established by  copyright law itself, are inconsistent with the custom and practice in the theater industry,  which is also inconsistent with some of the typical contracts found in theater production projects.

Here’s what I mean.

Directors routinely include in their contracts a clause providing that the Director will own the “direction” of the show, and shall have the right to copyright it in his/her own name. This is true, certainly, in Directors who are members of the SDC, the union representing stage directors and choreographers, which means, that producers have agreed to this provision in the course of collective bargaining.

The trouble is, under copyright law, a copyrightable work created by an employee in the course and scope of his employment (as with a director hired to stage a production), belongs to the employer, rather than the employee.  This is one part  of the often-misunderstood “work made for hire” definition contained in the U.S. Copyright Act. (the other doesn’t apply to theatrical productions, so I’ll save that discussion for another post).

What complicates things even more, is that in theater, and under Copyright law, the playwright, composer and lyricist own the show, and in almost all cases, the contract for the production of a play or musical provides that any changes or additions to the show must be approved by those authors, and if so approved, become a part of the show, and therefore the authors’ property.  Since the production contract is  often signed before a director has been hired, isn’t the producer, simply by hiring a director under the terms of contract allowing the director to own the “direction” of the show, a breach of the production agreement between producer and authors?

Since the direction of a play is, necessarily based on the play itself, it is a “derivative work”, and therefore requires permission from the copyright holders  (i.e., the authors).   Moreover, the only way the direction of a show can even be eligible for copyright protection is if it is “fixed” in some tangible medium, and that fixation, too would require the authors’ permission.

Now, this whole issue hasn’t been litigated very much, and the few cases dealing with this issue have arisen out of “copycat” directors of subsequent productions.  In those cases, the rights to stage the show had been obtained from the authors, but under a license that didn’t make reference to the staging and direction of the performances.   In at least two cases (both involving the musical  Urinetown (which I wrote about here and here ), the producers of  the original production sued later productions that were too similar to the originals.

So,   I’m taking an informal poll.  Who  really should own the direction of the play or musical?  Should the director be entitled to a royalty if his/her staging is re-created by later licensees of the show?  Should the show’s authors benefit from the efforts of other creative team members in this way?  Should play publishers begin licensing the direction along with the book, music and lyrics?

Please let me know your views on this by commenting.  I’ll publish a summary of the results in a few weeks.

Q: I work in educational theater. Every year we revisit the same topic: Filming performances. I keep telling the director and others that it is simply not legal to record a performance. The response I always hear is that they never sell the film. They are only making an “archival copy” which is given to the cast. I know it’s illegal. I know it’s specifically banned in the contract that the director signs. I’ve heard rumors of schools getting busted with huge fines, because clips showed up on You Tube. But I have no proof. What are the potential penalties? Are people schools really getting sued? Help me convince these people that they should stop.

A: It’s irrelevant whether they sell the film.  They’re making and distributing copies of a derivative work of the play.  That’s copyright infringement.  It doesn’t matter if money changes hands.  It’s NOT “archival” (which isn’t permitted anyway, under most licenses from play publishers).

The penalties for violations of these rules can exceed $150,000 per infringment, and each copy of the offending product can be considered an infringement.  So, with a cast of 10, each receiving a copy, you’re talking about as much as $1.5 Million dollars. (that’s enough to put most school districts in a serious bind).

Schools and nonprofit organizations are sued ALL THE TIME over this kind of thing.  They usually settle, so there’s little media coverage… but it is happening. It’s not just because videos wind up on the web….The major play publishers have ‘spies’ everywhere, and they’re reporting violations all the time.

Bottom line:  It’s illegal,  it’s a breach of the license agreement, and can be very costly.  Also, once a play publisher catches you, they will put you on their blacklist, and never authorize another production again.

This is intended as general information only and does not establish an attorney-client relationship. It is not a substitute for a private, independent consultation with an attorney selected to advise you after a full investigation of the facts and law relevant to your matter. We will not be responsible for readers’ detrimental reliance upon the information appearing in this feature.


Thinking of Producing it yourself? subscribe to my FREE e-course “6 ways to Finance A Feature Film” by visiting http://firemark.com/minicourse

The bill is viewed by some  as a way to sabotage the American creative dream machine by slipping in a little poison” and “the death knell of American leadership in the world.”

Specifically, three provisions are of significant concern to those who rely on so-called “angel” capital.  These provisions would:

1. increase the financial thresholds for qualification as “accredited investors,” who are, generally speaking, wealthy investors whose investments are not subject to significant federal securities regulation;
2. allow the Securities and Exchange Commission (“SEC”) to make certain angel financing transactions subject to state regulation (previously, all so-called “Rule 506 offerings,” which were commonly used for angel financings, were preempted from state regulation); and
3. require that those “Rule 506 offerings” that remain preempted from state regulation nonetheless be subject to a 120 day review process with the federal SEC.

Word on Capitol Hill is that the  bill will undergo significant changes, but now is the time to contact your Senators and Representatives to voice your opposition to the above provisions.

Currently, an investor qualifies as “accredited if he or she has a net worth of $1 Million or more, or has an annual income over $200,000 ($300,000 for married couples).  Under Rule 506, sales of securities to such investors are largely unregulated.  This new bill would change that dramatically, increasing these limits, thus making it harder than ever to find qualified investors for high-risk investments like films, theatre projects or start-up ventures.

Source:  Proposed financial regulatory reform bill will adjust accredited investor thresholds (WTN News).

Hat tip to my colleague Peter Levitan for bringing this to my attention.

If an actor improvises lines in a play, and the “author”/director of the play later wishes to write a screenplay which incorporates the actor’s improvised dialogue, does he have to obtain rights to that dialogue?  What is the written (or unwritten) rule regarding the incorporation of improvised dialogue … in this case, a large part of the character’s dialogue in the work?

This is an interesting and common issue in the theatre business. It’s actually pretty well established law in favor of the playwright.

Generally, the party who “fixes” the work is entitled to the copyright, unless there was an agreement that the work would be a Joint Work. (Joint Work must have been the INTENT of the parties at the time the work was created and fixed). If the director/playwright  “fixed” the work by recording it (either on paper, audio, or video), he owns the copyright.

Custom in the theatre industry (as evidenced by nearly every production agreement between a producer and a playwright) is that the playwright owns any and all changes to the material made or suggested by the director, producer, actors, etc. (Unlike in the film biz, the Playwright has the absolute right, in his/her sole discretion, to approve or reject changes to the play). (see, for an example, the Dramatists Guild Approved Production Contract(s))

Here, the Director is also the playwright, so I think, absent an agreement to the contrary, the Director/author owns the copyright in the play, and therefore the right to adapt it as a screenplay.

This issue also sometimes arises in cases dealing with so-called “company created works”, where a theatre company comes together and collaboratively creates a show. Who gets the copyright? The company? The person who sets the project in motion, acting as ‘author’ in selecting the various contributions, etc.?

In the case of Erickson v. Trinity Theatre, Inc., 13 F. 3d 1061 , 7th Cir. 1994, this issue was resolved in favor of the playwright. Notwithstanding the collaborative nature of the process, in that case, the playwright held the copyright, and the theatre company was enjoined from continuing to present the show(s) (and videos embodying them) after her departure from the company.

See also the RENT case ( Thomson v. Larson, 147 F. 3d 195, 2nd Cir. 1998) in which the dramaturg claimed (unsuccessfully) that she was a joint-author.

And see, Childress v. Taylor, 945 F.2d 500 (2d Cir.1991) which establishes the test for Joint Authorship. (the mere fact of collaboration alone is not sufficient. The parties must each contribute independently copyrightable material, and must manifest an intent that the work be held jointly)

Here in the 9th Circuit, the question of joint authorship arose in a case dealing with the ‘authorship’ of the Malcolm X film: Aalmuhammed v. Lee, 202 F. 3d 1227 – US: Court of Appeals, 9th Cir 2000 (Summary Judgment for Defendants, finding that no material issue of fact existed with regard to Defendants’ intent that plaintiff NOT be a joint author).

So, where works are created as a result of collaborative improvisational efforts of the actors, working with a director, writer, dramaturg, and others, the usual expectation is that the playwright will own the rights to the material created.    To a certain extent, well written contracts and business practices can change this result, but they must be in place prior to the creation of the work.  If you’re working with others on any creative venture, it’s important to handle issues of ownership, control and division of revenues early.  The help of an experienced theatre and entertainment lawyer  is invaluable in such situations.

The Colorado Clean Indoor Air Act (which went into effect in 2006) prohibits indoor smoking of tobacco and other products  in most public places, including theatres… even where the smoking is part of an actor’s performance, or mandated by the text of a play.

Curious Theatre and two other theatre companies sued the Department of Health, claiming that the ban on smoking onstage is an infringement of playwrights’ producers’ and actors’ rights of free expression.  The state agency countered with the argument that there are workable substitutes for actual cigarette smoke, which do not endanger public health.

At trial, actors and other theatre professionals testfied about the various problems  with these substitutes, referring to one situation in which audiences laughed at the fake-smoke effect at a crucial dramatic moment.  The Court however, was not swayed in favor of the free expression arguments.

Today, the Colorado Supreme Court finally weighed in on the case.  In the majority opinion,  Justice Nathan Coats held that even assuming smoking can sometimes be protected conduct, the smoking ban can’t be called unconstitutional because it is narrowly tailored for a specific purpose.   (protection of public health and safety).    “Like the theatrical use of substitutes for virtually every other type of dangerous or illegal conduct”, Coats wrote, [artificial cigarette smoke] ” is capable of amply communicating to an audience an intended message.”

Justice Gregory Hobbs dissented, arguing that  the ban is not, in fact,  narrowly tailored because it bans the smoking of any plant matter, not just tobacco, which “renders alternative means of the protected First Amendment expression untenable and even laughable”.

The battle over smoking bans in theatre rages on in several other states.  Perhaps before long, we’ll see the U.S. Supreme Court weigh in on the issue.

THR Esq. reports today that Jeremy Piven’s mercury poisoning excuse for leaving the Broadway production of “Speed The Plow” last season is sufficient, and he’ll not be liable to the producers for breach of contract, or other claims. Here’s the story:

Arbitrator accepts Jeremy Piven’s sushi explanation–THR, Esq. – Entertainment and Media Law.

Interestingly, the show managed to recoup its investors’ money before it closed, partly, some suspect due to the publicity around Piven’s departure, and replacement by the likes of Norbert Leo Butz and William H. Macy. So, had the producers prevailed in their complaint against Piven, the measure of their damages is anything but clear.

THR Esq. reports today that Jeremy Piven’s mercury poisoning excuse for leaving the Broadway production of “Speed The Plow” last season is sufficient, and he’ll not be liable to the producers for breach of contract, or other claims.  Here’s the story:

Arbitrator accepts Jeremy Piven’s sushi explanation–THR, Esq. – Entertainment and Media Law.

Interestingly, the show managed to recoup its investors’ money before it closed, partly, some suspect due to the publicity around Piven’s departure, and replacement by the likes of Norbert Leo Butz and William H. Macy.  So, had the producers prevailed in their complaint against Piven, the measure of their damages is anything but clear.

Check out Tamera’s blog piece, which includes several links to other news stories. Music Publishing A Good Investment « Current Trends in Copyright, Trademark & Entertainment Law.