Now in its 20th year, the New York International Fringe Festival, better known as FringeNYC, has presented nearly 4,000 productions for five-performance runs each summer, sustaining a beehive of theatrical activity in spaces on the Lower East Side. In contrast to many fringe festivals, all of which seem to owe a debt to a common progenitor, the Edinburgh Fringe, FringeNYC is a curated festival, with its 200 annual productions chosen from an array of applications. Unlike Edinburgh, which reportedly has some 8,000 productions scrambling for space and audiences each summer, FringeNYC engages all of the necessary spaces and doles them out to the productions they accept, keeping at bay the specter of highly speculative rents that has crept into Edinburgh. FringeNYC—whose 20th iteration ran Aug. 12-28—also negotiates an agreement with Actors Equity, provides lighting and sound equipment, and covers general liability insurance.

FringeNYC’s two-decade history made a recent “Biz Blip” from the Dramatists Guild to its members, challenging terms regarding subsidiary rights, or ongoing revenue, within FringeNYC’s authors agreements all the more striking. While it was not sent as a press release or public statement, the missive, issued the night before this year’s festival began, quickly became a hot topic on social media. One of the early sources for non-Guild members was Isaac Butler’s Parabasis blog, which reproduced the item in its entirety. Headed “NYC Fringe Contract: Warning,” it read, in part:

Playwrights should be aware that the standard for fringe festivals around the world (including the US Association of Fringe Festivals, the Canadian Association of Fringe Festivals, and the Edinburgh Festival, the model on which most other festivals are based) is that, as presenting entities that are not actually producing the work, festivals are not entitled to subsidiary rights from authors. The NYC Fringe, however, under Article IV-B of their contract, requires an author to pay 2% of subsidiary rights revenues earned within 7 years of the festival (after the author’s first $20,000). And the contract does not limit the scope of its definition of “subsidiary rights,” so it includes every use of the play on a worldwide basis; this is a definition broader than a LORT theater or even a commercial off-Broadway producer might be granted.

As director of Arts Integrity, I have ongoing relationships with both the Dramatists Guild (I’ve worked with them on multiple instances of theatrical censorship and have received an award from the Dramatists Legal Defense Fund) and FringeNYC and its producing artistic director Elena K. Holy (including reporting a 3-day “Fringe Binge” for Narratively.com and participating in a panel on censorship during the 2015 festival). So I felt it was incumbent on me to give both parties an opportunity to explain their policies and views.

In conversation at one of the FringeNYC Lounges on the first full day of the 2016 festival, Holy addressed the Guild statement.

“My initial response is that most of what they’ve said is true about our contract,” she said. “However, our contract incorporates a Participants Manual, which is like 64 pages, and none of that was included” in the Guild’s summary of the issues. “We don’t have an attorney on staff, so we wrote the participants’ agreement in 1997 and haven’t really changed it much since then. Every year facts, figures, dates, and stuff change, and technology changes, so that part gets put into the Participants Manual.”

Her biggest point of contention with the Dramatists Guild’s statement, she said, is the explicit comparison to the Edinburgh Fringe. “They see Edinburgh Festival Fringe as an industry standard,” she said, “which totally makes sense—they’re the granddaddy of them all, they were 50 years old when we started—but the model is very different. They charge a similar participation fee to us and then they hand you a list of venues, and say, ‘Great—go out and rent one of these venues to produce your show in.’

“Our thought was that if we did that in New York City and set loose 200 shows all looking to book the same 16 days, forget 10 grand a week—it would be 30 to 40 grand a week, just through supply and demand. So we rent the venues, equip the venues, we staff the venues, we do marketing, we do marketing speed dates, director speed dates, town meeting—we are very hands-on, and we’re invested in their production and we like to have skin in the game. I like that we are an adjudicated festival.”

Regarding the festival’s economics, Holy said, “On our 2014 990 form, we operated on 86 percent earned income. We’re invested in our artists. We spend between $6,000 to $7,000 on each show at FringeNYC. Part of that is we want, a) for them to be invested in us and, b) if they see huge success, huge unlikely success, for having done the show at FringeNYC, which does about 13,000 industry and press comps a year, then we would like for that to be recognized in order to keep our participation fees low for future artists. In our 19, almost 20, years now of doing our festival, three shows have contributed to that.” She cites Urinetown, which paid approximately $5,000 in royalties to the festival, as well as Eva Dean Dance and Dixie’s Tupperware Party.

Holy acknowledged, though, that some applicants have resisted FringeNYC’s terms, in particular its “2 percent clause.” Said Holy, “When a famous person walks into our office and fills out an application form and doesn’t submit their script, or when someone’s agent calls us and says, ‘I know they’ve been accepted into the festival but we can’t sign this,’ it’s a pretty good indication that they don’t need one of our 200 slots. We only have 200 spots and if their career is beyond what we can offer, if their play is being produced that widely or if in the past they’ve had opportunities on Broadway, there’s really no reason for our 2,500 volunteers to volunteer to help make somebody’s show happen when that somebody has ample opportunity elsewhere. So I’m not ashamed to say it scares a lot of people off, and they’re probably people that shouldn’t be applying for our festival even.”

Isn’t it possible that FringeNYC is capitalizing on people’s desire to get their work seen on a New York stage, whatever the cost? Holy responded by asking if that’s likely, given that the 2 percent royalty clause has “kicked in three times in 20 years? Given that it doesn’t kick in until after they’ve made $20,000, which actually these days means that you have to have a major motion picture made out of your play? Are they really encumbering their project? Most often what happens here is it’s not even the plays from FringeNYC that get picked up; it’s our playwrights’ second and third plays that are what’s being produced regionally, or when they get the Netflix series or the television show or whatever. So we certainly are not still around because of that $5,000 from Urinetown.” She notes that the Fringe has received no subsidiary income from such shows as Matt and Ben and Silence! The Musical.

Speaking for the Dramatists Guild, associate executive for business administration David Faux explained why the Guild’s “Biz Blip” made the comparison to other festivals. “When we speak to festivals and producers, every single one of them can say, ‘We’re special, we’re different, we do things differently from what the other people do,’ and invariably they’re telling the truth,” said Faux. “That’s the beauty of the theatre: Every festival has its unique attributes, every producer has his or her unique attributes that they bring that nobody else can bring. That’s part of the chemistry of good theatre.” He wondered, though, why one of the things that Fringe NYC does differently has to “rest on the authors’ shoulders? Why should the author be burdened with a unique attribute of the festival? We look at thousands of contracts that our authors ask us to review every year. When you see that many contracts, you see patterns, and you see where theatres and festivals are deviating. It’s always germane what other people are doing in the market.”

He stressed that the Guild doesn’t “tell members whether or not to sign contracts, we don’t dictate terms of contracts, but we do express our opinions when we believe a contract has substandard terms. In that way, all we have is the comparison.”

Asked to explain a very general idea of common practice regarding subsidiary rights, Faux said, “Commercial theatres certainly receive subsidiary rights. They’re taking on a lot of risk, and this is how the author shares in that risk on the back end. If it works out, the success of the authors work can go back to the commercial producer or the investors.

“With not-for-profits, there’s a different structure, because they are receiving grant monies, they don’t pay taxes, they get a certain number of benefits that commercial producers don’t. So that’s why it would be unusual to see an author giving subsidiary rights of more than 5 percent to a not-for-profit theatre. That’s about the top when you talk about regionals, LORTs. We’ve seen a trend lately of only having subsidiary rights kick in after a significant windfall, and by significant we’re talking $40,000 to $50,000. These are general terms.

“At festivals, though, you don’t see authors having to yield a revenue stream on their future revenue. That’s what’s different about this. You know what happens—a theatre festival in Wichita, Kans., will hear that NYC Fringe is getting subsidiary rights from the author, and that festival in Wichita doesn’t say, ‘Oh, it’s New York City, of course it gets something we don’t.’ That festival in Wichita says, ‘Our production values are even better than what they’re getting in New York. Our dedication, the number of hours we put in, because we have lower overhead, we can spend more time on each individual, festival has more value.’ And they may be right about that.

“But nobody thinks, ‘New York City Fringe is so much better than my festival, they deserve what they get.’ They all think they have something to bring to the table that New York City Fringe doesn’t. So suddenly because one festival says, ‘I want to tax the author,’ now authors are getting taxed all across the nation. So we have to say something about it before it becomes a standard practice.”

Regarding some smaller items in the Dramatists Guild statement, there are several points that bear clarification.

• The Guild’s memo states, “It has been reported to us that the Fringe sent out its contracts to authors for this year’s festival at the end of July. If that is true, then it was a contract presented only a few weeks before the festival was scheduled to begin, after money has been raised and spent, leaving little or no time for authors and producers to assess their options in good faith.” Holy pointed out that all of the major terms of the agreements are included as part of the application process, so the terms should not come as a surprise, unless, in her words, “they didn’t read the information on the application before they submit.” However, Holy acknowledged the lateness of the agreements this year, saying, “I take full responsibility. We were trying to do everything electronically this year using DocuSign, and I set it up so that the author’s agreement would fire when everyone had completed Step One, the participants’ agreement and their W-9, and they haven’t all done that yet. That was a foolish way to set that up. So then I just gave up and emailed them a PDF.” Holy noted that this was a new process this year, replacing the previous practice of mailing paper contracts back and forth.

• The Dramatists Guild cites “the standard for fringe festivals around the world (including the US Association of Fringe Festivals, the Canadian Association of Fringe Festivals, and the Edinburgh Festival, the model on which most other festivals are based).” But Jeff Larson, responding to an online inquiry by Arts Integrity to the US Association of Fringe Festivals, told me, “The USAFF is a loose affiliation of United States Fringes and does not enforce standards on its members.”

• The Guild noted, regarding the authors’ contract, that, “There are no obligations specified (either in the contract or the rules) for the Festival to support the show with any particular expenditure of marketing monies, nor any warrant of proper billing for the author and the play in whatever marketing and advertising the Fringe might do, and there is also no guarantee of mutually acceptable venues or performance schedules for the play, nor any discussion of the festival’s duties with regard to providing technical support.” As Holy noted above, those terms are included in the Participant Manual, an Appendix to the Participant Agreement. While the Guild concerns itself solely with the authors agreements, in the interest of transparency, FringeNYC might consider providing both the authors and participants agreements, as well as the participant manual, to the Guild so that all pertinent terms regarding production of the authors’ work are made clear.

• The Philadelphia Fringe Festival, which more closely follows the Edinburgh model, posts its guidelines and artist tools for prospective applicants. They can be found at here for comparison purposes. Details on producing at the Edinburgh Fringe itself can be found here.

With those matters cleared up, what’s the takeaway? Given the Guild’s characterization of prevailing practice and Holy’s acknowledgement that the terms cited were correct, what to make of FringeNYC terms regarding subsidiary rights?

It is perhaps useful to look at the example of another New York summer festival, the New York Musical Festival, commonly referred to as NYMF, in operation since 2004 and the starting place for such musicals as Next to Normal and [title of show]. In 2010, NYMF sought to introduce a subsidiary rights clause to their agreements, saying in a statement:

Writers are the core beneficiaries of NYMF. Our goal is for NYMF shows to have future life, and for as many of our writers as possible to have their work produced again after the festival.

We specifically chose not to demand income from future third-party producers, as many other theatre companies do, because doing so would encumber the project—making it less likely to be optioned or produced. Instead, we carefully structured our contract so that if—and only if—writers benefit substantially from NYMF’s support, they give back a small percentage so that we can provide similar opportunities to future generations of writers.

But following a challenge by the Dramatists Guild to these new terms, NYMF withdrew its new terms in less than a month, writing in a statement:

The mission of NYMF is to support theatre artists, not to argue with them. 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. Given the challenges of moving new musicals from the page to the stage and on to further productions, NYMF wants first and foremost to ensure that the shows we present have the unified support of the community.

While not working in the same kind of festival format, the Eugene O’Neill Theater Center, one of the country’s oldest play development labs, also sought to introduce a subsidiary rights clause in 2006, at the start of the application process for the 2007 summer season. That drew a rebuke from Marsha Norman and Christopher Durang, co-heads of the playwriting program at the Juilliard School at the time. A report from the New York Sun noted that the effort was quickly rescinded:

“We have their assurance that they will not this year, or in the future, be asking for a percentage of future royalties from the plays they accept for development,” Mr. Durang and Ms. Norman wrote. “They are looking for other sources of funding, but those monies will not come from your subsidiary rights.”

I should note here that during my tenure as executive director of the O’Neill Theater Center from 2000 to 2003, I recall being charged by the board of directors to investigate the impact of introducing a subsidiary rights participation in authors’ future royalties. While I do not retain my notes from the time, I clearly remember my survey of prevailing practice, which consistently showed that regardless of whether I spoke with a festival, developmental, or producing organization, there was a clear dividing line for when it was considered appropriate to negotiate for subsidiary rights; that line was when a show was actually produced, not merely workshopped or showcased, even in cases where the work in question had been commissioned.

In conversation, Elena Holy noted that “we call ourselves presenters,” although in the context of explaining how the role of FringeNYC differs from the Edinburgh Fringe, she described more direct involvement with productions than many presenters might have. In its Participant Agreement, which is signed by the designated liaison for each FringeNYC show, FringeNYC identifies itself as the “Presentor,” as distinct from a producer (to which the Participant may be equivalent, even when the Participant is the producer, author, and performer all in one). It is the Participant who is taking on primary responsibility for raising money, securing rehearsal space, assembling the show and delivering it to FringeNYC—in other words, performing the role of producer. The Participant is even subject to penalties if they’re unable to do so after a certain date, though they may not have continuing right to the show themselves. While FringeNYC does provide resources to each production and makes an investment of resources in them, more than many fringe festivals, anecdotally the costs of producing the shows themselves, especially for companies not based in New York, can be considerably more than the FringeNYC allocation, once artist compensation, physical production, and travel and housing are factored in. In addition to the 2 percent subsidiary rights participation that FringeNYC asks of authors, it also asks for 2 percent of the Participants’ future revenues as well (again, only over the $20,000 incomethreshold).

While the delineation of Presentor, Presenter, Participant, Producer, and so on may seem semantic, it’s not. Subsidiary rights typically accrue to producers who mount full productions of shows at their expense (or with funds raised by them), whether commercial or not-for-profit, although the terms may vary. In Arts Integrity’s experience and in the examples given, such subsidiary rights agreements are not customary for productions which do not meet that standard. As for subsidiary rights granted by authors to entities responsible for the original or early mountings of their play, for more than 25 years there has been discussion of the complications engendered by encumbrances on authors when works receive several early productions that each secure (or demand) subsidiary rights. Providing such rights to developmental productions as well could have the effect of making it too expensive to produce a work that has promised multiple payments to multiple entities, and could severely impede an author’s ability to be properly paid for subsequent productions. Subsidiary rights are typically activated once a production has given a certain number of performances; as few as five are typically insufficient.

For 20 years, FringeNYC has been and continues to be an invaluable asset for new, inventive, irreverent, and diverse work in New York. While it can’t hope to catch up with the longevity of the Edinburgh Festival Fringe, it is deserving of a comparably long life. But now that the frenzy of its most recent season has subsided, FringeNYC would be well served to reconsider its policy regarding subsidiary rights, lest it prove an increasing impediment to the depth and breadth of work seen in its venues each summer. Precisely because the Fringe by its nature attracts younger or less established artists seeking a showcase in one of the world’s greatest theatre cities, with the possibility of being seen by industry and media professionals who could advance their shows, their careers, or both, it would do well not to ask more of its authors, its artists and its producers than any other fringe, showcase, workshop, reading series, or the like.

While many artists have enjoyed and benefited from the Fringe and have agreed to its longstanding terms, with the subsidiary rights language ultimately being activated for the very tiniest percentage, the Fringe should consider the message they send with their contracts, and weigh whether a more embracing, less encumbering spirit would set an example and an expectation for artists and producers of what they can and should expect in the future. And that begins with the contract.

Howard Sherman is director of the Arts Integrity Initiative at The New School College of Performing Arts. An earlier version of this article appeared on www.artsintegrity.org.