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This week's question comes from Michael Ricciardi of Van Nuys, CA.

Question: How much pay does a composer, lyricist and librettist each get during a Broadway rehearsal period, and once the show opens what percentage of the show does each get? Answer: To answer this question, Playbill.com talked with Peter Franklin, an agent who represents songwriters and playwrights for the William Morris Agency, and Ralph Sevush, the executive director of the Dramatists Guild. This article will discuss Broadway musicals only.

Around 25 years ago, during the run of a Broadway musical, writers were paid a percentage of the gross — 4.5 percent at first, rising to 6 percent after a show recouped its initial investment, as required by the Dramatists Guild's contract with the producers.

But in the last two decades, most Broadway musicals have transitioned to a profit pool system. In this system every week the writers either get a percentage of the profit (if the show is making a profit) or a small weekly guarantee, whichever is greater. By enacting this system, each side was making a tradeoff: the salary for a writer with a marginal or struggling show got lower, to help those shows stay afloat, but the salary for a writer with a hit show got higher.

As required by the Dramatists Guild's contract, the writers' weekly guarantee is at least $6,000 — split equally among composer, lyricist and book writer.

But if there's a profit, and if the writers' share of the profits comes out to be more than $6,000, then they'll take home the share of the profits instead.

If there's a profit, typically around 65 percent of that profit goes to the investors and 35 percent goes to the profit pool. The profit pool includes the writers, director and lead producer, plus perhaps designers, the orchestrator, the source material's rights holder and others. That 35 percent of the profit is split among these participants, with some getting more than others. Once the show recoups its initial investment, the profit pool's share typically rises to 40 percent.

Sevush says the Dramatists Guild's contract isn't concerned about the profit pool's 35 percent figure or about the writer's share within that 35 percent. All that the contract requires is that the writers take home at least 15.56% of the profit before recoupment, and at least 17.78% afterwards. The profit pool is split up in a way that accommodates these figures.

Recently, a concept called amortization has been added into the mix. Under this arrangement, one to two percent of the initial capitalization is taken out of the gross and given directly to the investors, before the profit is calculated. This arrangement allows the producer to guarantee the investors that if the show runs a certain number of weeks, they will have made their money back.

So if a show makes $800,000 a week and costs $600,000 per week to run, then the profit is $200,000. And if the show's initial capitalization was $12 million, and amortization is one percent, then $120,000 of that $200,000 goes directly to the investors. Of the remaining $80,000, 65 percent goes to the investors and 35 percent goes to the profit pool. The writers would make at least 15.56% of that $80,000, or $12,448. If there are three writers, each takes home $4,149 that week.

One of the reasons for the rise of the profit pool system is skyrocketing production costs. "A show in 1980 could survive at 50 percent" capacity, Franklin says. "Now it's got to be 75 to 80 percent."

If a show is really in trouble, the producers might ask the royalty holders to forego even their weekly guarantees, in order to keep the show running.

Writers aren't paid for the rehearsal period. But, leading up to a Broadway run, writers do get paid at different stages of the process, as required by the Dramatists Guild's contract. When producers option a show for 12 months, the writers get a minimum of $18,000 (they get more if the option is later extended). At the first rehearsal, the writers get paid an advance of around $60,000, or more, depending on the circumstances.

These payments are an advance on the income the writers make during the Broadway run, Sevush says. Once a show recoups its investment, the writers have to give a certain bit of the their weekly paycheck back to the producers, until these payments are paid back.

The writers of a hit Broadway show eventually take home money from licensing to touring, foreign, amateur and stock productions, plus cast recordings, the rights to the songs, and even rights to the movie adaptation. Overall, Franklin points out, "A hit makes pots of money." Sevush adds, "All you need is one hit, and you've created a revenue stream that will subsidize your writing career." Even shows that never make back their initial investments on Broadway but get respectable reviews and run for a year or so can often end up netting some of that extra income. For huge flops, however, writers don't get much more than their initial $78,000 (the option plus the typical advance), and that could be shared among three writers, for five years of work developing a musical.