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Royalty

ROYALTY

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.

cross-references

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

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"Royalty." West's Encyclopedia of American Law. . Encyclopedia.com. 25 Jul. 2017 <http://www.encyclopedia.com>.

"Royalty." West's Encyclopedia of American Law. . Encyclopedia.com. (July 25, 2017). http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/royalty

"Royalty." West's Encyclopedia of American Law. . Retrieved July 25, 2017 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/royalty

royalty

roy·al·ty / ˈroiəltē/ • n. (pl. -ties) 1. people of royal blood or status: diplomats, heads of state, and royalty shared tables at the banquet. ∎  a member of a royal family: she swept by as if she were royalty. ∎  the status or power of a king or queen: the brilliance of her clothes, her jewels, all revealed her royalty. 2. a sum of money paid to a patentee for the use of a patent or to an author or composer for each copy of a book sold or for each public performance of a work. 3. a royal right (now esp. over minerals) granted by a sovereign to an individual or corporation. ∎  a payment made by a producer of minerals, oil, or natural gas to the owner of the site or of the mineral rights over it. ORIGIN: late Middle English: from Old French roialte, from roial (see royal). The sense ‘royal right (esp. over minerals)’ (late 15th cent.) developed into the sense ‘payment made by a mineral producer to the site owner’ (mid 19th cent.), which was then transferred to payments for the use of patents and published materials.

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"royalty." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. 25 Jul. 2017 <http://www.encyclopedia.com>.

"royalty." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. (July 25, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/royalty-0

"royalty." The Oxford Pocket Dictionary of Current English. . Retrieved July 25, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/royalty-0

Royalty

Royalty

royal persons collectively, 1480.

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"Royalty." Dictionary of Collective Nouns and Group Terms. . Encyclopedia.com. 25 Jul. 2017 <http://www.encyclopedia.com>.

"Royalty." Dictionary of Collective Nouns and Group Terms. . Encyclopedia.com. (July 25, 2017). http://www.encyclopedia.com/education/dictionaries-thesauruses-pictures-and-press-releases/royalty

"Royalty." Dictionary of Collective Nouns and Group Terms. . Retrieved July 25, 2017 from Encyclopedia.com: http://www.encyclopedia.com/education/dictionaries-thesauruses-pictures-and-press-releases/royalty

royalty

royaltyfooty, putti, sooty, tutti •shufti • casualty • deputy •butty, cutty, gutty, nutty, puttee, putty, rutty, smutty •mufti, tufty •bhakti • subtlety • humpty-dumpty •Bunty, runty •bustee, busty, crusty, dusty, fusty, gusty, lusty, musty, rusty, trusty •fealty • realty •propriety, society •loyalty, royalty •cruelty •Krishnamurti, Trimurti •liberty • puberty •faggoty, maggoty •Hecate • chocolatey • Cromarty •commonalty • personalty • property •carroty • guaranty • mayoralty •warranty • admiralty • severalty •poverty •Alberti, Bertie, dirty, flirty, shirty, thirty •uncertainty •Kirstie, thirsty •bloodthirsty

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"royalty." Oxford Dictionary of Rhymes. . Encyclopedia.com. 25 Jul. 2017 <http://www.encyclopedia.com>.

"royalty." Oxford Dictionary of Rhymes. . Encyclopedia.com. (July 25, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/royalty

"royalty." Oxford Dictionary of Rhymes. . Retrieved July 25, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/royalty