Royalty payment

form of payment for use of artistic works

A royalty is a payment made to someone for the use of something, an asset, that they have created or own. For example a musician who writes a song is paid a royalty each time the song is played on the radio, or each time another musician plays the song. The owner can allow other people to use their asset by paying a license or a franchise. The amount paid is usually a percentage of the all the money made from using the asset, the gross, or from the just the profit, the net. Another way is to set a fixed price, for example a set amount for each book or recording. There are many other ways that the royalty fee can be calculated and paid.[1][2][3][4][5][6][7] A royalty interest is the right to collect a stream of future royalty payments.[8]

A license agreement defines the terms for these payments. The agreement can also set conditions for how, where and when an asset can be used. License agreements can also be regulated. A government of a country might receive royalty payments for mining, or extracting oil, and would protect its interest in the agreement with laws.


  1. "Focus: Tax and Intellectual Property – April 2004". Allens Arthur Robinson. Retrieved 2007-09-13.
  2. "Royalty (definition)". Retrieved 2007-09-13.
  3. United Nations Industrial Development Organization (1996). Manual on Technology Transfer Negotiation. Vienna: United Nations Industrial Development Organization. ISBN 92-1-106302-7.
  4. Guidelines for Evaluation of Transfer of Technology Agreements, United Nations, New York, 1979
  5. Licensing Guide for Developing Countries: A Guide on the Legal Aspects of the Negotiation and Preparation of Industrial Property Licenses and Technology Transfer Agreements Appropriate to the Needs of Developing Countries. Geneva: World Intellectual Property Organization. 1977. ISBN 92-805-0395-2.
  6. UNIDO International Workshop on Technology Transfer Negotiation and Plant Level Technology Needs Assessment, 7–8 December 1999, New Delhi.
  7. Dave Tyrrell. "Intellectual Property & Licensing". Vertex. Archived from the original on 2019-03-23. Retrieved 2007-09-14.
  8. "Royalty interest (definition)". Schlumberger. Retrieved 2007-09-13.[permanent dead link]