What is a royalty?
submitted by malou aranzado

Bob

It's a usage based payment made by one business to another in exchange for using the other business' asset or intellectual property. For example, producing shoes with a brand name that the manufacturer doesn't own. In this case a royalty is paid to the owner of the copyrighted brand to settle the cost of using the logo and name.

Randy

Another common example is music. An artist basically "rents out" the usage of the music. Whenever a radio station plays the song, it pays a small royalty (that adds up significantly over time) to the artist.