Royalty

A royalty is a legally-binding payment made to an individual, for the ongoing use of his or her originally-created assets, including copyrighted works, franchises, and natural resources. In most cases, royalties are revenue generators specifically designed to compensate the owners of songs or properties, when they license out their assets for another party's use. It is a financial instrument where the owner has no responsibility for operating or capital costs. The royalty rate or the amount of the royalty is typically a percentage based on factors such as the exclusivity of rights, technology, and the available alternatives.