royalty

View more Business & Finance videos

payment to the holder for the right to use property such as a patent, copyrighted material, or natural resources. For instance, inventors may be paid royalties when their inventions are produced and marketed. Authors may get royalties when books they have written are sold. Land owners leasing their property to an oil or mining company may receive royalties based on the amount of oil or minerals extracted from their land. Royalties are set in advance as a percentage of income arising from the commercialization of the owner’s rights or property.

Previous:	Round Trip Trade, Round Lot
Next:	Royalty Trust, Rubber Check

Money paid to a property owner for extraction of some valuable resource from the land.
See mineral lease.


Example: Richman owns a 500- acre ranch in west Texas. An oil company negotiates a mineral lease with Richman to explore for oil on the ranch. Under the agreement, Richman will receive a royalty based on the price of oil and the number of barrels of oil pumped from the ranch.

Previous:	Row House, Rollover Loan
Next:	Rule of 72s, Rule of 78s

This entry contains information applicable to United States law only.

Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced.

When a person creates a book, song, play, or painting, the work is considered intellectual property. Similarly, when an inventor receives a patent on his invention, the inventor has intellectual property rights in the thing created. Typically, authors, songwriters, composers, playwrights, and inventors do not have the financial ability to fully exploit the commercial use of their creations. They must turn to businesses that specialize in the marketing of intellectual property. When a business obtains the right to market the creation, the creator usually receives compensation in the form of a royalty.

A royalty agreement is part of the contract that the creator of the work negotiates with the business that seeks to exploit the creation. A royalty can be as simple as a fixed amount of money for each copy of a book or compact disc sold by the business. For example, a novelist agrees to let a publisher publish her new book. For granting the publisher the rights to the book, the novelist will receive $3 for each copy sold. If the novelist is a best-selling author, the publisher may agree to a higher royalty rate. Book and music publishers sometimes give an advance against royalties to an author or musician when the contract is signed. For example, the novelist might receive $5,000 as an advance against her royalties. In this case the publisher will keep the first $5,000 of the royalties to cover the cash advance. Typically, if the book failed to produce enough royalties to cover the advance, the publisher would write off the difference as a loss. However, a publisher might sue an author to recover an advance if the author never produces a publishable manuscript.

A playwright's royalty may be based on a percentage of the box office receipts from each performance of the play. An inventor's royalty might be an amount per unit sold or a percentage of the profits generated by the invention. In some cases it might be both. Because a royalty is one of the terms negotiated in a contract, the type and amount will depend on the bargaining power of the parties.

Under the law royalties are personal property. When a person dies, the heirs receive the royalties. For example, when Elvis Presley died, his estate went to his daughter Lisa Marie, who now collects the royalties from the music company that sells her father's recordings.

Royalty agreements are also used in the mineral and gas industries. These agreements have much in common with the origin of the term. For many centuries in Great Britain, the Crown owned all the gold and silver mines. A private business could mine these "royal" metals only if it made a payment, a royalty, to the Crown.

When, for example, a petroleum company wants to drill for oil on a person's land, the company negotiates a royalty agreement with the owner of the mineral rights. If the company strikes oil, the owner of the mineral rights will receive a royalty based on a percentage of the barrels pumped out of the wells. The owner may receive the royalty in kind (the actual oil) or in value (the dollar amount agreed to in the contract), based on the total production from the property.

The schedule for royalty payments is specified in the contract. Quarterly or annual payments are typical. The royalty owner has the right to make an independent accounting of the business records to ensure that the figures upon which the royalty is based are accurate.

See: Copyright; Entertainment Law; Literary Property; Mine and Mineral Law; Music Publishing; Patents; Publishing Law.

Created from the varieties Trousseau and Alicante Ganzin, this hybrid is a red grape that yields red juice (instead of white). It's used mainly to add color to blends. Royalty was developed by the university of california, davis and released in 1958. It's grown primarily in California's central valley although its acreage is declining owing to lack of popularity.

A payment made for some right or privilege, as when a publisher pays a royalty to an author for the author's granting the publisher the right to sell the author's book.

A payment to an owner for the use of property, especially patents, copyrighted works, franchises or natural resources.

Investopedia Says:
Royalties are usually expressed as a percentage of the revenues obtained through the use of the owner's property.

Related Links:
Valuing firms in this sector can seem like a black art, but there is a systematic way to pin a price on potential. Using DCF In Biotech Valuation
If you like being your own boss, this is not the job for you. Is Buying A Franchise Wise?
Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value. Intangible Assets Provide Real Value To Stocks
Learn about the components of the statement of financial position and how they relate to each other. Reading The Balance Sheet
The P/B ratio can be an easy way to determine a company's value, but it isn't magic! Using The Price-To-Book Ratio To Evaluate Companies

Quotes:

"We treat our people like royalty. If you honor and serve the people who work for you, they will honor and serve you." - Mary Kay Ash

"A family on the throne is an interesting idea. It brings down the pride of sovereignty to the level of petty life." - Walter Bagehot

"The Sovereign has, under a constitutional monarchy such as ours, three rights -- the right to be consulted, the right to encourage, the right to warn. And a king of great sense and sagacity would want no others." - Walter Bagehot

"The best reason why Monarchy is a strong government is, that it is an intelligible government. The mass of mankind understand it, and they hardly anywhere in the world understand any other." - Walter Bagehot

"Royalty is a government in which the attention of the nation is concentrated on one person doing interesting actions." - Walter Bagehot

"A throne is only a bench covered with velvet." - Napoleon Bonaparte

See more famous quotes about Royalty

For a list of words related to royalty, see:

• Publishing - royalty: author’s percentage of profits from book sale
• Corporations and Business Practices - royalty: payment for rights to property based on percentage of revenue generated by it
• Social Structure and Conditions - royalty: hereditary social class that rules certain countries

---

See words rhyming with "royalty."

Dansk (Danish)
n. - kongelige personer, de kongelige, licensafgift, patentafgift, forfatterhonorar

Nederlands (Dutch)
het koningshuis, koninklijkheid, koningschap

Français (French)
n. - membre d'une famille royale, membres d'une famille royale, royauté, droits d'auteur, redevance, royalties

Deutsch (German)
n. - Mitglied des Königshauses, Tantieme

Ελληνική (Greek)
n. - βασιλικό αξίωμα, βασιλική οικογένεια, (πληθ.) συγγραφικά ή πνευματικά δικαιώματα, δικαιώματα εφευρέτη

Italiano (Italian)
dignitý reale, diritti di autore

Português (Portuguese)
n. - realeza (f), majestade (f)

Русский (Russian)
член королевской семьи, авторские отчисления

Español (Spanish)
n. - realeza, familia real, regalías, derechos de autor o de inventor

Svenska (Swedish)
n. - kunglighet, royalty

中文（简体）(Chinese (Simplified))
皇室, 王权, 技术使用费

中文（繁體）(Chinese (Traditional))
n. - 皇室, 王權, 技術使用費

한국어 (Korean)
n. - 왕위, 왕의 것, 왕족의 한 사람, 존엄

日本語 (Japanese)
n. - 特許権使用料, 著作権料, 印税, 王位, 王権, 王族, 王の尊厳

العربيه (Arabic)
‏(الاسم) ملكيه, ضريبه, مبلغ من المال يدفع إلى مؤلف أو مخترع إو صاحب حق مقابل إستعمال هذا الحق‏

עברית (Hebrew)
n. - ‮מלכות, תמלוג, משפחת המלוכה, זכות, במיוחד על מחצבים, שמעניק שליט לאדם או לחברה, תשלום של מפיק נפט, גז כו' לבעל הקרקע‬

If you are unable to view some languages clearly, click here.