Royalty
From ForcaWiki, the simple encyclopedia
| In one sentence | Ongoing payments a distributor owes to whoever licensed them a movie's rights, based on a percentage of what the movie earns. |
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| Category | Film and Television |
| Related | Gross Receipts, Net Profits, Distributor, Back-End |
Imagine letting a store sell copies of a board game you invented, and in exchange, the store agrees to pay you a small percentage of every sale they make, for as long as they keep selling it.
A royalty works the same way for a movie. It is a contingent payment, meaning it depends on how much the movie actually earns, based on a percentage of Gross Receipts or Net Profits. A Distributor pays royalties to whoever licensed them the movie's rights in the first place, as ongoing compensation for that license.
Fun facts
- A royalty can keep paying out for years, as long as the movie keeps earning money somewhere in the world.
- Royalty and overages payments are both sometimes casually lumped together as a movie's Back-End.
- Negotiating the exact royalty percentage, and exactly what counts toward the earnings it is based on, is one of the most important parts of any licensing deal.