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Royalty
Payments A royalty payment is a share or
percentage of earnings paid to someone who has an ownership
interest in the item generating the revenue.
When an individual or business creates books, software,
drawings, photographs, or other works, the creator owns the
right to reproduce and market the work. The creator of the
work may transfer all or a portion of these rights. When
this happens, the creator typically receives royalty
payments as compensation. An author, for example, may
receive a royalty each time a copy of the author's book is
sold. Or an inventor may receive a royalty each time an
article is sold under a patent. Royalties may result from
the transfer of ownership of photographs, books,
screenplays, software, and other copyrighted or patented
works. They may also arise from less obvious sources. For
example, in the oil, gas, and mineral industry, the owners
of oil or mineral-producing land receive royalties.
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