Subsidiary Rights Income
Subsidiary rights are the rights to license productions of a play or musical that the producer of the Broadway production does not obtain in the agreement with the author. Typically, the producer will bargain for the right to do a Broadway production and all the types of developmental steps that precede a Broadway production. Usually, the producer will also get options to produce a North American tour and commercial sit-down productions, commercial productions in London and tours in the UK and Australia/New Zealand. Some producers may also want to get options to produce in other, non-English speaking territories. That leaves a lot of potential exploitation in the hands of the author, including motion picture and TV productions, stock and amateur productions, such as in high schools or regional theaters, and foreign language productions. Income from these productions is called subsidiary rights income.
The agreement between author and producer will grant the producer a share of the income from these sources. Along with all the other rights the producer gets from the author, this right will be contributed by the producer to the Broadway production (which is referred to as the “mother company”). There are several formulations for sharing this income between the author and the Broadway production. In each formulation, the production will share in the income for a finite period of time, after which the income will belong entirely to the author.