Royalty
A royalty is a payment made to the owner of intellectual property such as domain names, patents, and copyrights or natural resources such as oilfields in order to use the property.
Royalties are generally calculated as a percentage of revenues generated by using this property.
In some domain name transactions, it can be more profitable to the domain owner to structure a royalty arrangement instead of a typical domain leasing agreement with a lessee. As such, the lessor (domain owner) receives a percentage of the revenue generated by the lessee using his domain name. This royalty could be higher than fixed lease payments.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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