The popular annual festival touched off a furor earlier this summer when the new 2010 contract for participants at the high-profile annual showcase of new musicals included a clause claiming a percentage of any applicant and author's future proceeds from the shows presented, including "2 percent of the Applicant's gross on all income received from the play in excess of $20,000 over ten years," plus, "2 percent of the Author's gross on all income received from the play in excess of $20,000 over ten years."

The Dramatists' Guild — as well as many individual artists, some of them intimately involved in the festival — cried foul, and demanded the proviso be removed. "What they shouldn't do is tax the writers who they've given a special [nonprofit] status to benefit," Ralph Sevush, executive director of business affairs at the Dramatists' Guild, told Playbill.com in early June. "Everyone's hurting today, including the writers."

The Festival listened.

"The mission of NYMF is to support theater artists, not to argue with them," said NYMF executive director Isaac Robert Hurwitz in a letter to the Dramatists Guild's Sevush. "We therefore withdraw our request to share in the subsidiary rights of authors participating in the 2010 festival and will remove that section (paragraph 5(E)) from our contract."

Hurwitz had previously argued that the festival needed future profits from participating shows to remain financially viable. "In trying to find a solution that enables the festival to become more self-sustaining, we thought it was more appropriate that the funds come from the most successful of our alumni, rather than hitting the shows that hadn't yet made it," he told Playbill.com "It would be great if someone could endow us. But that's not reality. This was the most fair option we could come up with." The battle, however, may not be over. The festival has backed off only on its claim of the author's subsidiary rights. It still retained a claim on the applicant's subsidiary rights. Since the applicant — or producer — and the author are often one and the same at the festival, this means an author might, in some cases, still be giving up future rights to their work to the festival.

Also, the festival made it clear to the Guild that it intends to bring up the issue again next year. So the current truce extends only to the 2010 festival.

In recent years, the Guild has fought large nonprofit houses like the Roundabout Theatre Company and the Public Theater which have claimed large chunks of the future profits generated by the shows it produces.

Shows that have seen festival workshop springboard into praised nonprofit and commercial productions include [title of show], Gutenberg: The Musical, Next to Normal, Room, Yank! and Altar Boyz. The few dozen or so available slots in each autumn presentation have become highly sought after. This year's festival runs Sept. 27 to Oct. 17.