Royalty, in the modern commercial theatre the payment made to a dramatist—usually a fixed percentage of the takings—every time his play is performed. Amateur societies generally pay a fixed fee for each night or group of nights of a particular production. The payment of royalties is of comparatively recent origin. In Elizabethan times plays were either bought outright by a manager, as was done by Henslowe, or formed part of the stock-in-trade of the company to which the actor-author belonged; this was the system under which Shakespeare worked. While a play remained in manuscript no other manager or company could perform it, but once it was printed anyone could stage it on payment of a small fee. This probably helps to account for the number of early plays which have failed to survive, since they were never printed. Some authors, particularly if a play had been successful, would recover the original prompt-copy for the sake of the small fee they might receive when it was printed. The first to do this systematically was Ben Jonson, whose collected plays and masques were printed in 1616, and it is to his pioneer work in this field that we owe the publication of the plays of Shakespeare by Condell and Heminge in the First Folio of 1623. From then onwards dramatists began to bear in mind the importance of a reading public which was to increase considerably, particularly when the rise of Puritanism made it safer to read plays than to see them. As early as 1602 the custom arose of giving the author the profits of the third, sixth, and ninth performances of a play, the so-called ‘author's nights’ (see BENEFIT), but with few theatres, a potentially small audience, and a constant change of bill, many plays failed to achieve even a third night. Under Restoration conditions dramatists continued to receive little monetary reward for their work; most of them, being men of substance, had little need of it and the others managed as best they could, sometimes with the help of a patron. Conditions were little better in the 18th century. One of the most successful plays of the time, The Beggar's Opera (1728), brought Gay less than £700, which was considered enough to make him rich. At the end of the century a return was made to the old practice of buying plays outright. Thomas Morton is said to have received £1,000 for one of his comedies, and Mrs Inchbald £800 for Wives as They Were and Maids as They Are (1797). Unfortunately in the early 19th century the prestige, and consequently the monetary value, of dramatic works declined sharply. Farces and musical pieces earned more than straight plays, and even they were priced very low: it was possible to buy a burletta outright for two guineas. Consequently the theatre was inundated with a stream of thefts, plagiarisms, and adaptations of French and German plays turned out quickly by poorly paid hacks.

The first movement to secure proper recognition of dramatic authorship in England was made by Planché, and it was mainly owing to his efforts, and those of Bulwer-Lytton, that adequate copyright protection was established for plays written after 1833, though the law was sometimes difficult to enforce. The first dramatic copyright law in the USA was not passed until 1856. In France, where Beaumarchais had made great efforts to establish a royalty system earlier, Scribe secured for himself the payment of a royalty after the success of Le Solliciteur (1817), and by 1832 a payment to the author of 12 per cent of the nightly receipts was usual. One of the first to profit by the new system in England was Boucicault. For his highly successful London Assurance in 1841 he received only £300, whereas in 1860 he netted £10,000 for The Colleen Bawn, which seems to have been the first play in London to be paid for on the royalty system. Other authors were quick to follow Boucicault's example, and by degrees the standard rate of royalty became 5–10 per cent, rising perhaps to 20 per cent for established authors. During the early part of the 20th century, with the theatre largely dependent upon successful West End runs and subsequent provincial tours, dramatists tended to make either a great deal of money or very little. Since the Second World War, however, there have been increasing opportunities for them to supplement their incomes by writing for the radio, the cinema, and television. Limited subsidies have also been secured through the Arts Council, either indirectly, because of the increase in the number of companies whose grants enable them to take risks with new works, or, less often, through bursary schemes, personal grants, and the attachment of resident dramatists to particular theatres. (See also SHARING SYSTEM.)

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.

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.

Royalty

royal persons collectively, 1480.

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