Types of Royalties: A Comprehensive Guide

Types Of Royalties

Ever listened to a song on repeat, bought a movie ticket, or purchased a designer tee? Behind every creation, theres a fascinating world of royalties. Dive in, as we unwrap this candy box of potential earnings.

Table of Contents

  1. Music Royalties
  2. Film & Television Royalties
  3. Book Royalties
  4. Art and Design Royalties
  5. Patent Royalties
  6. Franchise and Trademark Royalties
  7. Other Royalties
  8. Conclusion

Royalties are like the sweet rewards creators receive every time their creations are used or purchased. From the melodies that capture our hearts to the books that transport us to new worlds, royalties play a critical role. In this guide, well uncover some of the most common types of royalties.

Music Royalties

Music has been an integral part of human culture, evoking emotions and memories. With the proliferation of digital platforms, ensuring artists are rewarded has become paramount. Music royalties guarantee that creatorsfrom singers to lyricists, composers, and producersreceive their due when their work is enjoyed.

  • Streaming Royalties: These are generated each time a song is played on streaming platforms. They’ve become pivotal with the rise of digital music. Example: A Taylor Swift song played on Apple Music.

  • Print music Royalties: When musical compositions are transcribed and sold as sheet music, these royalties kick in, ensuring composers get their fair share. Example: A music student buying Mozart’s symphony sheets.

  • Performance Royalties: These royalties are the right of composers when their compositions are publicly performed, be it live or via broadcasts. Example: Ed Sheeran’s track echoing in a shopping mall.

  • Synchronization Royalties: When songs find their way into visual media like films or ads, these royalties come into play, benefiting the song’s creators. Example: An iconic Beatles track in a car commercial.

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Film & Television Royalties

Movies and TV shows are more than entertainment; theyre a result of countless hours of dedication. When we pay for a ticket or stream an episode, part of that expense is directed towards the talents behind it, ensuring that actors, directors, writers, and producers are rewarded.

  • Box Office Royalties: Derived from cinema sales, they ensure filmmakers are compensated as their films light up the big screen. Example: Crowds pouring in for the premiere of a new “Star Wars” film.

  • Home Video Royalties: When movies or shows are sold or rented on physical formats, these royalties benefit the creators. Example: Renting “The Godfather” trilogy DVD for a weekend binge.

  • Merchandising Royalties: This streams from branded merchandise related to movies or shows, supporting the production houses. Example: A teenager flaunting a “Spiderman” backpack.

  • Syndication Royalties: These cater to the earnings when shows are rerun on TV networks, ensuring the production team and cast are continually rewarded. Example: “The Office” episodes being a late-night staple.

  • Streaming Royalties: As online platforms dominate, these royalties ensure digital consumption also rewards creators. Example: Fans streaming the latest season of “The Crown” on Netflix.

Book Royalties

From ancient scrolls to digital screens, books have been humanitys constant companions. Authors pour their heart and soul into their words, and book royalties ensure theyre compensated for every tale they weave, every emotion they capture.

  • Print Royalties: Every time a physical book finds a new reader, the author earns from it. Example: A budding writer’s novel flying off bookstore shelves.

  • Electronic Royalties: With e-books gaining traction, these royalties ensure digital formats are just as rewarding. Example: A thriller enthusiast downloading a bestseller on their e-reader.

  • Subscription Service Royalties: Platforms offering multiple books for a fixed fee compensate authors through these royalties. Example: A reader exploring “Pride and Prejudice” on a reading app subscription.

  • Library Royalties: Libraries, the age-old temples of knowledge, also contribute to an author’s earnings when they lend books. Example: A classic, “Moby Dick”, being borrowed repeatedly over the decades.

  • Audiobook Royalties: As the world shifts towards audio formats, these royalties reward authors for auditory renditions of their works. Example: Commuters soaking in “The Alchemist” audiobook during morning traffic.

Art and Design Royalties

Art transcends boundaries and eras, resonating with souls. Whether its a timeless painting, a trendy t-shirt design, or an iconic logo, artists deserve their due. These royalties ensure that visual creators, from painters to digital designers, receive their share.

  • Art Reproduction Royalties: Every replica, be it posters or souvenirs, compensates the original artist. Example: Monet’s “Water Lilies” reproduced as wall art for homes.

  • Art Licensing Royalties: When artworks grace products or advertisements, these royalties ensure artists are rewarded. Example: A Picasso-inspired design on a coffee mug.

  • Graphic Design Royalties: Every logo, banner, or advertisement has a creator behind it, and these royalties recognize their contribution. Example: A company’s logo, designed by a freelancer, plastered on billboards citywide.

  • Digital Art Royalties: In the digital age, art isn’t just confined to canvases or paper. Digital artists create for video games, online advertisements, and more. These royalties ensure every pixel they craft is acknowledged. Example: A striking character designed for a hit online game.

  • Resale Royalties: Original artworks can appreciate over time. When they’re sold for a profit, a portion goes back to the original artist. This ensures that artists benefit from the increasing value of their work. Example: A Basquiat painting being auctioned off for millions, years after its original sale.

Patent Royalties

Inventions propel humanity forward. They solve problems, enhance comfort, and even save lives. Patents protect these innovations, and the royalties associated ensure inventors are continually rewarded for their groundbreaking ideas.

  • Licensing Royalties: Whenever a company adopts an inventor’s patented technology, a part of their earnings from it goes back to the inventor. Example: A tech firm using a patented battery-saving technology in their latest smartphone.

  • Sub-Licensing Royalties: Sometimes, a company with rights to a patent can allow another entity to utilize it. A part of the earnings from this secondary use also benefits the original inventor. Example: A sports brand sub-licensing a special moisture-wicking fabric tech to another apparel brand.

  • Cross-Licensing: This involves two or more parties agreeing to share patents, enriching both their offerings without monetary exchanges but through mutual benefits. Example: Two electronic giants sharing tech innovations to produce a groundbreaking product.

  • Minimum Guarantee Royalties: Some companies commit to a fixed periodic payment to patent holders, regardless of their sales figures. It ensures a steady income for inventors. Example: A pharmaceutical company guarantees annual payments for a drug formula, regardless of its sales.

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Franchise and Trademark Royalties

Franchises expand brands, taking them to newer territories and audiences. Trademarks, on the other hand, protect brand identity. The royalties associated ensure that original business ideas and brand identities are continually rewarded as they grow and evolve.

  • Franchise Royalties: As entrepreneurs adopt a proven business model and brand name, a part of their earnings goes back to the original business. Example: Every Subway sandwich sold worldwide ensures the parent company gets its due.

  • Trademark Royalties: Brands are powerful. When a company’s logo, character, or brand name is used by another entity, it results in earnings for the original brand. Example: A sneaker company using a famous cartoon character on their shoes and compensating the animation company for it.

Other Royalties

Beyond the often-discussed categories, royalties extend into a myriad of sectors. The world thrives on innovation and use of resources, and theres a royalty structure present in many unsuspecting areas. These royalties ensure that whether its the resources drawn from the Earth or the intangible bits and bytes of the digital realm, original stakeholdersbe it inventors, discoverers, or landownersare compensated for the utilization of their assets or intellectual properties.

  • Electronic Royalties: As our gadgets get smarter and more connected, electronics play an integral role. Electronic royalties arise when patented technologies are incorporated into consumer electronics. Example: A brand using a specific patented touchscreen technology in their tablets.

  • Oil and Gas Royalties: These royalties are paid to the landowner or mineral rights holder when oil or gas is extracted from their property. It’s usually a percentage of the revenue or a set amount per unit produced. Example: A local landowner receives a share when an energy company drills for oil on their property.

  • Mineral Royalties: Similar to oil and gas, these royalties benefit the owners of mineral-rich lands when companies mine materials like gold, coal, or diamonds. Example: A mining company extracts gold from a private land, resulting in royalty payments to the landowner.

  • Timber Royalties: Forests are vital, not just for the environment but for industries too. When timber companies cut down trees for wood, landowners earn timber royalties. Example: A lumber company felling trees on a plot and compensating the land’s owner.

  • Natural Resource Royalties: Other natural resources, such as water, fish, or certain agricultural products, also have associated royalties, especially when extracted in large quantities. Example: A fishing company pays royalties to a government for exclusive fishing rights in a specific ocean territory.

With these additional categories, its evident that royalties are not just limited to the arts or entertainment sector. They permeate through various industries, ensuring fairness, compensation, and continuous innovation.


The landscape of royalties spans far and wide, covering not only music, books, and films but also extending to the depths of our planets resources and the intricacies of modern tech. As the world continues to digitize and innovate, understanding these royalties becomes increasingly essential, not just for creators but for investors as well. At Public.com, you can seek diversification of your investment portfolio by tapping into royalty-generating assets. Join us in exploring these dynamic revenue streams. Before investing, please be aware that all investments come with inherent risks, and we encourage you to review our risk disclosures to make well-informed decisions.


What are the different types of music royalties?

There are several types of music royalties, including mechanical, performance, sync, and print music royalties. Each type relates to a different method of music consumption, from radio play to physical sales. For those looking to diversify their investment portfolio, Public.com offers a unique opportunity. Their royalties offering allows you to tap into this potential revenue stream, giving you a fresh avenue for additional diversification while supporting the arts. Before investing, please be aware that all investments come with inherent risks, and we encourage you to review our risk disclosures to make well-informed decisions.

How are music royalties generated?

Music royalties are generated through various means, such as when a song is played on the radio, streamed online, sold as a physical or digital copy, or used in movies and TV shows. Investing in these royalties has traditionally been limited to industry insiders. However, with platforms like Public.com, individual investors can now get a slice of these royalties, potentially allowing them to earn from the ongoing popularity of songs and albums. Before investing, please be aware that all investments come with inherent risks, and we encourage you to review our risk disclosures to make well-informed decisions.

How do artists get paid royalties?

Artists are typically paid royalties based on agreements with record labels, publishers, or distribution platforms. These agreements determine how much an artist gets every time their music is played, purchased, or used in any commercial manner. Additionally, Public.com has introduced an innovative way for investors to get involved. By investing in music royalties on their platform, you may be able to align your interests with those of artists and potentially earn alongside them. Before investing, please be aware that all investments come with inherent risks, and we encourage you to review our risk disclosures to make well-informed decisions.

How are book royalties calculated?

Book royalties are determined by the agreement between the author and the publisher. Typically, they’re a percentage of the book’s sales price or a fixed amount per book sold.

How do patent royalties work?

Patent royalties arise when an invention or process is used by others, licensed under the patent holder’s agreement. They can be a percentage of sales or a fixed fee.