Royalties have a number of meanings; most often, they refer to the money paid to the owner of a copyrighted work in exchange for its use by another. Musicians and writers of published works have organizations that licence and collect royalties on behalf of their members.

Royalties can also be the amount a company or individual will pay you to license a patent. In most cases the majority of products companies sell are not ones they invented. They form an agreement with the inventor called a license which grants them the ability to manufacture, market, and sell the product. In turn they agree to pay the inventor a set sum of the gross amount that they bring in. This fee is called a royalty.

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