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This question is about careers.
What is a royalty in business?
A royalty in business refers to payments in the form of fees made by a third party to the owner of a product or patent for the specific utility of that patent or product. Patents or products owned by companies are what are known as intellectual properties (IP). Royalty payments are typically detailed and included within a company's licensing agreements.
Companies earn royalties when they allow other organizations to use their:
Concepts and ideas
Unique products
Unique services
Company logos
Company trademarks
Generally speaking, royalties are a small portion of a company's business revenue. Payments for royalties can be paid out in perpetuity or for a specific outlined time frame. Royalties are beneficial for both parties in a licensing agreement.
The company whose intellectual property is being licensed by another receives payment and the company making the royalty payment gets to use said intellectual property. Licensing agreements also result in organizations growing their networks of business-to-business (B2B) relationships, and this can also be highly beneficial for all parties involved.
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