Royalty arrangements or simply “royalties” are developed to benefit sellers or licensees and purchasers or licensers of various intellectual property rights. These types of arrangements afford a great opportunity for sellers to expand to new markets or increase their market share, while purchasers could diversify their product range and obtain access to specialized goods or services that would be hard for them to produce on their own.
Common Examples of Royalty Arrangements
Royalties are typically used in the publishing world since publishers usually don’t employ authors and prefer to work with authors independently. Some examples of industries that frequently utilize royalty arrangements include the following:
- The Broadcasting Media: A composer receives royalty payments every single time his or her work is broadcasted.
- The Music Industry: An artist receives royalties from selling his or her musical works online or on CDs.
- The Film Industry: Producers, scriptwriters, actors, as well as related individuals, get royalties for their work.
- The Mobile App Industry: Mobile operators earn royalties when they sell apps in their app stores.
- The Video Game Industry: Producers or creators of video games typically receive royalty payments for extra sales of video games considering they satisfy specific revenue targets.
- The Mineral Resources Industry: Mining companies pay off landowners using royalty agreements so that they could mine natural resources like silver, natural gas, or petroleum, among others.
- Industries where designers, celebrities, and sports teams are paid royalties for the right to utilize their trademark or logo promo items, commodities, or clothes.
How Much Could You Earn from Royalty Arrangements?
The specific way royalty payments are calculated would be significantly dependent on the particular industry. License contracts specify royalties as part of the net income, while some royalty payments would be based on how much items were sold or used. It’s likewise common for purchasers to make advanced royalty payments. For instance, if the book you wrote generates more royalties than your advanced payment, you’ll get additional royalties.
With this in mind, if you’re having issues accounting your royalties or are unsure of your rights as a licensee or licensor, consult a royalties specialist as soon as possible.