Royalties are usage-based payments made by one ‘licensee’ to another ‘licensor’ for ongoing use of an asset, most typically an intellectual property right. Companies such as recording studios, designers, creative agencies, software vendors and manufacturers use products and services that are usually the intellectual property of another organization or individual and as such, are required to pay them a certain amount of royalty fee.

The calculation of royalty fees, however, can be a complex procedure as it may involve a number of contributing factors. A publisher, for example, can pay an author a percentage of total book sales or a fixed price for every book sold over a defined period of time. It is also likely that the publisher will sell the book through hundreds of retail outlets across different geographical regions, which can further add to the complications of managing royalty fees in a quick and timely manner. more...