You may have heard the old adage about Broadway. you can kill people you just can’t make a living.Of course, it’s possible that the blockbuster will return Hamilton– However, it is often reported that only 20% of productions return their initial investment.
So why read any further?
Unlike productions, theater copyrights can provide investors with consistent and predictable returns, similar to music publishing copyrights. And in the current environment where interest rates are rising and music copyright valuations are very high, value-minded investors in 2023 should turn their attention to the stage.
“Grab that cash with both hands and create a stash” –pink floyd
The appeal of music copyright is clear. Iconic musical works can reach important consumer segments while generating millions of dollars in licensing revenue each year. Most investors rely on third parties to collect and manage their profits, so there is little to no overhead required to enjoy years of “mailbox money.” As such, there has been an influx of capital competing to pay him 20 to 25 times more of the net publisher’s share (NPS) to acquire these streams.
At such high valuations, astute investors are looking for novel ways to increase their revenue streams. Natalia Nastaskin, Chief Content Officer, Primary Wave said: Attract new audiences and followers for your songs. “
One of the most high-profile music catalog content initiatives is getting their songs to Broadway. “The data show that biomusicals such as Tina When MJ: Musical, as well as shows inspired by music catalogs such as american idiot When jagged little pills, jukebox musicals such as rock of ages It will attract a cross-generational audience and turbocharge the listening, buying and streaming of the music featured in the show and its accompanying cast album,” adds Nastaskin.
Come along and listen…Broadway’s copyright lullaby
The simplest way to think about theatrical copyright is when the playwright writes the original play and retains full copyright at the time of publication. Similarly, when dealing with original musicals, the formula gets a little more complicated. The writer jointly owns the copyright of the music created by the amalgamation of the lyricist’s and composer’s participation and creative contributions.
So what is the value of theater copyrights and how do they generate revenue? Like musical works, live stage copyrights are monetized in multiple ways.
use a stage musical Into the Woods As an example. Written by James Lapine, music and lyrics by Stephen Sondheim, copyright owned and controlled by his Lapine and Sondheim property. With Broadway revivals taking place in New York right now, copyright holders receive a weekly box office cut for granting rights to their shows. A new cast of his album was recorded and released to mark the production. This incurs royalties to the owner, similar to goods sold by the production. All of these are considered “subsidiary” rights granted to the production by the copyright owner. With a thriving global tour circuit beyond New York, ITW is set to launch in the US next season. This will return unique box office and merchandise royalties to Lapine/Sondheim.
Beyond the rights granted to mount, merchandize and record the cast of commercial works, the copyright of Into the Woods It also provides additional licenses for audio/visual rights, novelizations, concept albums, and performing rights to hundreds of thousands of professional, amateur, and school productions annually for adapting musicals into films and television shows. I also have “ancillary” rights to In the world. You may be surprised to learn that music production at your child’s school had to pay a negligible fee for performance license rights to legally do so.
Through all these exploits, high-profile stage copyrights can easily generate millions of dollars a year, and like musical productions, these revenue streams for evergreen titles are consistent and predictable.
Similar to music rights, these streams are a passive activity for their owners, as management of theatrical rights is handled by third-party agents. Savvy theatrical rights investors can also add value to each through revivals, international productions, film adaptations, album releases, merchandising, and the exploitation of many other underutilized rights. can work to create opportunities for
How do theater copyrights stack up?
Despite the limited data available, it is generally accepted that the largest recent transaction was the sale of the Rodgers & Hammerstein catalog in 2017 (Oklahoma, music sound), Tams-Witmark’s 2018 sales (Hello Dolly, Bye Bye Birdie), and publisher Samuel French, were all acquired by Concord Music.
Lisbeth R. Baron, CEO of boutique investment bank Baron International Group, who advised on all three transactions, said: [theatrical copyrights], multiples of annual revenue stream, or value per copyright. “
When asked about the parallels with music rights and the prospects for theater rights as an asset class, she added: The difference is that music publishing is often 20 to 25 times her NPS, which equates to about 30 times her EBITDA. Theatrical rights are close to 10-14 times her EBITDA, and licensing revenue is on the rise, as is music publishing. Both are scarce, but theatrical is much more nascent and generally has fewer assets available at any given time. However, the category is gaining recognition and momentum. “
The music industry has two major advocacy groups: the RIAA for recorded music and the NMPA for music publishing. Each represents the interests of labels and publishers respectively through activities such as lobbying, publishing market data, and hosting industry awards and events.
Similarly in theater, on the production side, the industry has a Broadway League that represents the interests of Broadway theater owners and producers. They lobby, publish data on the financial performance of Broadway and touring performances, and co-sponsor the Tony Awards.
In terms of theater publishing, NMPA’s closest counterpart is The Dramatists Guild. It is an outstanding organization dedicated to protecting the interests of playwrights, including playwrights, librettists, composers and lyricists. But their advocacy does not extend beyond playwrights to theater publishers, underlying rights holders, existing music owners, name and likeness owners, and secondary market copyright holders. Similarly, publishers, agencies, playwrights, and other stakeholders do not compile and share market data, remaining siled, causing economic harm to the entire ecosystem.
Time will tell if the gap between valuations and advocacy narrows, but one thing is certain. The spotlight is starting to move towards the wings, and 2023 could be the year theatrical copyrights take center stage.
Michael Barra is CEO of Lively McCabe Entertainment, a global theatrical rights development and management company based in Ridgewood, New Jersey. The company has a content deal with his Primary Wave.
Opinions expressed in commentary articles on Fortune.com are solely those of the authors and do not necessarily reflect the opinions or beliefs of the authors. luck.