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What are Copyright Royalties?

By G. Wiesen
Updated May 17, 2024
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Copyright royalties are fees paid to the owner of a copyright by another individual or company that has licensed the right to use that copyrighted material in some way. This is typically done in situations where a company licenses a copyrighted work, such as a film or piece of music, for public display or for use in another work. Such licensing is not the same as the owner of a copyright selling that copyright to someone else, and only authorizes the licensee to use the work in a specific way. Copyright royalties are paid to the owner of the copyright and potentially others involved, depending on the nature of the copyright.

The ways in which copyright royalties are paid out can be fairly complicated and depend a great deal on the laws of a country in which these royalties are being paid and the type of artwork involved. A copyright, in general, is a form of ownership granted to the creator of a work of art when that work is created. This ownership grants the artist sole ability to use his or her work and he or she must authorize anyone else to reprint, copy, display, or otherwise use the work protected by copyright.

While a copyright can be sold, and the new owner gains control over the copyrighted work and sole authority over its use, the use of a copyrighted work can also be granted through a license. This is often done in a variety of commercial situations, such as a filmmaker licensing a movie to be distributed by a particular company, a music studio licensing radio stations to play songs, and film studios selling a television channel a license to play a movie on that channel. When this type of license is granted, there is typically a stipulation within the licensing agreement regarding copyright royalties that must be paid by the licensee to the licensor.

The way these copyright royalties work and are actually paid out can be remarkably complicated. Different forms of artwork, such as film, books, and music, have different ways in which royalties must be paid and to whom they must be paid. For example, in the US when a song is purchased on a compact disc (CD) or digital download, the record studio that published the song is paid for that purchase. The studio then pays royalties to the songwriter and the actual musicians involved in the recording.

When a song is played on the radio or other public venue, however, copyright royalties are paid from the studio to the songwriter but not to the recording musicians. Other types of artistic industries have similarly complicated copyright laws, and copyright lawyers are often consulted by artists looking to sell their work to ensure that licenses and copyright royalties are properly issued and paid. These royalties depend on the laws of a country as well, so international copyright royalties can become quite complicated.

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