Royalties are payments made to the owner of intellectual property (IP) for the use or exploitation of that property. This compensation is typically a percentage of revenue generated from the use of the IP. Intellectual property can include things like patents, copyrights, trademarks, and in some cases, mineral rights or rights to literary or artistic works.

For example, authors receive royalties from the sales of their books, musicians receive royalties from the sales and streaming of their music, and inventors receive royalties from the use of their patented inventions. Royalties serve as a form of compensation for creators and inventors for the use of their ideas and creations by others.