Royalty payment

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.Guidelines for Evaluation of Transfer of Technology Agreements, United Nations, New York, 1979UNIDO International Workshop on Technology Transfer Negotiation and Plant Level Technology Needs Assessment, 7–8 December 1999, New Delhi. A royalty interest is the right to collect a stream of future royalty payments.

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.

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Category:Business