by Jeff and Todd Brabec
In addition to the Dramatists Guild percentage of gross box office receipts composer / lyricist royalty calculation, another formula being used on Broadway is the "Royalty Pool" arrangement where all royalty participants (for example, music and lyric writers, book-writer, director, choreographer, etc.) share in an agreed-upon percentage of the weekly operating profits of the musical with certain guaranteed minimum per-point royalties.

The total amount of money in the royalty pool is based on a show's operating profits, which is the excess of the gross weekly box office receipts after deduction of the costs of running the show.

This calculation is many times made on a monthly basis.

The actual percentage of the operating profits which is shared by the royalty participants varies, but in some cases, it is 35%.

For example, if the box office receipts were $3 million for the month and the running costs of the show were $2 million, the operating profits for the show would be $1 million.

The actual royalty pool in this case would be $350,000 (35% x $1 million) for the month, and each royalty participant would receive a pro-rata share of the $350,000 based on the number of points the person had been awarded.

In the event that a royalty pool royalty arrangement is agreed to by the composers, lyricists, and other royalty participants, there many times is a guarantee that the monies per point will not be less than a certain amount per week.

For example, the agreement might state that each point will be worth $1,000 so that even if the royalty pool's actual figures would result in a royalty participant receiving less than $1,000, that person would still receive the $1,000-per-point guarantee during any week.

© 2007 Jeff Brabec, Todd Brabec

This article is based on information contained in the new, revised paperback edition of the book "Music, Money, And Success: The Insider's Guide To Making Money In The Music Business" written by Jeffrey Brabec and Todd Brabec (Published by Schirmer Trade Books/Music Sales).

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