Ask Playbill.com is a weekly Playbill.com column that answers questions about theatre, generated by readers and Playbill.com staff, every Thursday. To ask a question, email AskPlaybill@Playbill.com. Please specify how you would like your name displayed and please include the city in which you live.
This week's question comes from Bradley Robertson of Las Vegas, NV.
Question: "I was curious about the profits from original cast albums. Do all performers including the stars and chorus performers receive royalties from the continued sales of the recordings?"
Answer: Yes, in cast recordings, all of the performers receive royalties.
After a certain number of albums are sold, the participants start getting a royalty for each album sold thereafter (more specifics on that later). According to Kurt Deutsch, the president of Sh-K-Boom Records, the royalty usually works out to around $1.50 to $2.00 per album. Sixty percent of the royalty goes to the writers — shared by the composer, lyricist and book writer. The standard is to give each of those three jobs a third each (and you get two thirds if you do two of the jobs), but the actual split can be negotiated.
The other 40 percent of the royalty goes to the producers of the show. Fifteen or twenty percent of the producers' share (depending on certain conditions) is split equally amongst all performers, regardless of star power. Deutsch says he can imagine a special case in which a huge star might negotiate with the producers for an extra bit of their share, but it has not happened in his experience. "If Madonna was going to do a Broadway show, I'm sure she would have some special deal," he notes.
Deutsch also points out that a lot of the stars are getting paid a lot up front for the recording session. Union rules mandate that each performer gets a week's salary for an eight-hour recording session, and for every hour after that, they continue to get the same rate (an eighth of a week's salary per hour). "A lot of these guys are getting paid $20,000 to $30,000 a week," he says. "That's kind of why they don't negotiate a higher royalty down the road."
Perhaps another reason why they don't negotiate a higher royalty is that most of this royalty talk is moot, as most cast recordings never sell enough copies to start paying out royalties. According to Deutsch, what traditionally happens is that the participants start getting royalties once the royalty portion on all the albums sold equals the cost of making the album.
For instance, let's say an album costs $500,000 to make (total production and marketing costs for a Broadway album might be $300,000 to $500,000, and Off-Broadway that figure might be $100,000 to $150,000, Deutsch says). Let's pretend we were counting royalties from the very first album sold, and let's say the royalty is $2 an album. The royalty then wouldn't kick in until all those $2 bundles equaled $500,000 — in other words, after 250,000 albums are sold. And cast recordings rarely sell that much. Note that the record company would actually pay back its costs and start turning a profit well before 250,000 albums are sold, since they're pocketing much more than $2 an album.
Deutsch says that he recently began using a new structure in which his company and the producers share more of the costs and the profits. "Essentially, when the album pays back the investment at the beginning, they share in the profits, and the actors and composer and producers start receiving their money much earlier."
Regardless of when the royalty kicks in, the songwriters always get something. For every album sold from the very beginning — not just the albums sold after the royalty kicks in — the songwriters get an additional "mechanical royalty." The amount is negotiated and ends up being about eight cents a song, or between 75 cents and a dollar per record, Deutsch says.