In 2023, a mid-size regional theater commissioned a playwright to develop a new work. The commission fee was $15,000—roughly what a plumber earns in two months. That payment covered a year of research, multiple drafts, and participation in a staged reading. The playwright's agent called it generous. The theater's board called it a risk. Both were right, and that tension tells you nearly everything about how new American theater actually gets made.

New play development is the research and development arm of the theater industry, yet it operates without anything resembling a coherent economic model. Unlike film development, where option fees and step deals create structured pipelines, theater's approach to nurturing new work remains a patchwork of commissions, workshops, residencies, and informal relationships—each with different assumptions about who bears the financial risk and who captures the eventual reward.

Understanding these economics matters because they shape what stories reach the stage. Commission structures determine which playwrights can afford to write ambitiously. Workshop budgets determine how much experimentation a script can undergo before it must prove itself commercially. And rights negotiations determine whether the institutions that invest early in a play's life share in its later success. These aren't administrative details. They are the invisible architecture of the American theatrical canon, and they deserve the same rigorous analysis we give to the art they produce.

A theater commission is, at its most basic, a payment to a playwright to write a new play. But the simplicity of that description masks enormous variation in practice. Commission fees at American nonprofit theaters range from $5,000 at smaller organizations to $50,000 or more at major institutions like Manhattan Theatre Club or the Goodman. The Dramatists Guild provides no standard fee schedule for commissions—unlike its minimum terms for production royalties—which means each deal is individually negotiated, creating wide disparities in compensation for comparable creative labor.

The critical variable isn't just the dollar amount—it's what's attached to it. Some commissions come with a production commitment, meaning the theater agrees in advance to stage the resulting work. Others are open commissions, where the theater funds the writing but retains the option to produce without obligation. The distinction fundamentally alters the playwright's creative calculus. A production commitment provides security but can subtly pressure a writer toward choices they believe the commissioning institution wants. An open commission offers creative freedom but no guarantee that months or years of work will ever reach an audience.

Payment timing adds another layer. Some theaters pay the full commission upfront. Others structure payments in installments—one-third on signing, one-third on first draft delivery, one-third on a revision milestone. Installment structures can look like prudent financial management from the institution's perspective, but they effectively make the playwright a contract worker delivering on someone else's timeline. For writers without independent financial resources, this can constrain the very risk-taking the commission was designed to enable.

There's also the question of exclusivity windows. Many commissions include a period during which the commissioning theater holds first-production rights—typically twelve to twenty-four months after the script is delivered. If the theater decides not to produce, the playwright is free to take the script elsewhere, but the clock has already run. In an industry where momentum and institutional relationships drive a play's trajectory, a two-year hold by a theater that ultimately passes can significantly damage a new work's prospects.

The most progressive commission models are beginning to address these imbalances. Some theaters now offer open-ended residencies rather than project-specific commissions, paying playwrights annual stipends without requiring deliverables. Others have shortened exclusivity windows or eliminated them entirely. These approaches recognize that the most valuable outcome of a commission isn't a single script but a sustained creative relationship—and that relationships work best when both parties have genuine agency.

Takeaway

The structure of a commission isn't neutral—it encodes assumptions about power, risk, and creative ownership that shape the work itself long before a word is written.

Once a script exists in some form, the development process begins—and this is where the economics become genuinely strange. A typical new play workshop at a professional theater costs between $15,000 and $75,000, covering director and actor fees, rehearsal space, dramaturgical support, and administrative overhead. Some plays go through three, four, or five rounds of development at different institutions before reaching a full production. The cumulative investment across the field in a single play can easily exceed $200,000—for a work that may ultimately generate $30,000 in royalties over its first production run.

So why do theaters invest? The financial logic operates on several registers simultaneously. The most straightforward is pipeline management. Theaters that develop new work are building their future seasons. A workshop is cheaper than licensing a proven title and discovering in rehearsal that it doesn't work for your audience. Development lets an institution test material in low-stakes conditions, gathering audience feedback from readings and workshops before committing full production resources.

But the calculation extends well beyond direct returns. Workshops serve a crucial relationship function. By investing in a playwright's development process, a theater positions itself as the natural home for that writer's future work. When a workshopped play becomes a hit elsewhere—as happened when plays developed at places like New York Theatre Workshop or Steppenwolf eventually transferred to Broadway—the originating theater gains reputational capital that supports fundraising and audience development for years afterward.

Mission alignment is the third factor, and often the decisive one for nonprofit theaters. Most institutional mission statements include language about developing new voices or expanding the American dramatic repertoire. Grant applications to foundations like the Andrew W. Mellon Foundation or the National Endowment for the Arts require evidence of this commitment. Workshop spending becomes, in effect, a cost of maintaining nonprofit status and foundation funding—an investment in institutional legitimacy as much as in any particular script.

The danger in this model is what some industry observers call development hell—the tendency for plays to cycle endlessly through workshops without ever reaching production. When development spending serves primarily institutional rather than artistic needs, plays can become perpetual works-in-progress, revised to satisfy each new set of stakeholders rather than brought to the definitive realization their playwrights envision. The most effective development programs set clear timelines and decision points, treating workshops as genuine tests rather than indefinite holding patterns.

Takeaway

Workshop investment makes sense only when institutions are honest about their actual motivations—pipeline building, relationship cultivation, or mission fulfillment—and design their programs accordingly.

The most contentious economic question in new play development is deceptively simple: when a play succeeds beyond its initial production, who benefits? The Dramatists Guild has long held that playwrights retain copyright ownership of their work regardless of how much institutional support they received during development. This is a fundamental difference from film and television, where studios typically own the resulting intellectual property. In theater, the writer always owns the script.

But ownership and revenue are different things. Over the past two decades, theaters have increasingly sought subsidiary rights participation—a percentage of the playwright's future earnings from a play they helped develop or premiere. The standard range is 2% to 5% of net royalties from subsequent productions within a defined window, typically five to ten years after the premiere. For a play that becomes widely produced, this can represent meaningful revenue. For a play that doesn't travel, it's essentially zero—making subsidiary rights a speculative investment for theaters.

The argument for institutional participation is straightforward: theaters that invest significant resources in a play's development and assume the risk of premiering unproven work deserve to share in the upside. Without some mechanism for capturing downstream value, the economic incentive to develop new work collapses. Why spend $200,000 nurturing a play through workshops if another theater can produce the finished script for a standard licensing fee?

The counterargument is equally compelling. Playwrights already accept below-market compensation at nearly every stage of the development process. Commission fees rarely reflect the actual labor involved. Workshop participation is often unpaid or minimally compensated. Production royalties at nonprofit theaters, while following Dramatists Guild guidelines, are modest compared to commercial entertainment. Asking writers to also surrender a share of their future earnings can feel less like partnership and more like extraction—particularly when the theater's total investment is a fraction of what the playwright contributed in creative labor.

Emerging models attempt to resolve this tension. Some theaters have adopted enhancement deals similar to those used in commercial transfers, providing additional development funding in exchange for clearly defined participation in commercial productions only. Others have created co-production agreements that give the originating theater preferred access to future productions without taking a royalty cut. The most equitable arrangements acknowledge that new play development is a shared risk requiring shared reward—and that the specific terms should reflect the actual resources each party contributed, not just institutional bargaining power.

Takeaway

The fairest rights arrangements treat playwrights and theaters as genuine partners in risk—calibrating each party's share of future reward to their actual contribution, not their relative negotiating leverage.

The economics of new play development are not broken so much as they are undesigned. What passes for an industry model is really an accumulation of ad hoc arrangements, each reasonable in isolation, that collectively create a system where the people who bear the most creative risk—playwrights—capture the least financial reward.

Fixing this doesn't require revolution. It requires the same rigorous strategic thinking that theaters apply to season programming and audience development. Commission structures should be transparent and standardized. Workshop investments should have clear decision timelines. Rights negotiations should reflect actual contributions rather than institutional inertia.

The theaters that get this right will attract the strongest writers and produce the most vital new work. The ones that don't will find themselves recycling proven titles while wondering why their art form feels static. In theater, as in any ecology, the health of the whole system depends on how well it nourishes the organisms that generate new growth.