Royalties include compensation paid to the owner for the use of property, usually copyrighted
material (e.g., books, music, or art) or natural resources (e.g., minerals, oil, gravel
or timber). Royalty compensation may be expressed as a percentage of receipts from
using the property or as an amount per unit produced.
To be considered royalties, payments for the use of natural resources also must be
under a formal or informal agreement whereby the owner authorizes another individual
to manage and extract a product (e.g., timber or oil), and
in an amount that is dependent on the amount of the product actually extracted.