What is royalty? Royalties review

Copyright royalties are a form of income for copyright holders. In most countries, this income is subject to tax in the form of withholding tax.

Royalties are a form of payment. Specifically, they refer to a certain share of money that the copyright owner receives from others using their work. In a broad sense, some people also regard royalties as a form of remuneration.

Royalties can be further divided into publishing royalties, performance royalties, recording royalties, reproduction royalties and public lending royalties. Among them, publishing royalties are the main applicable method. The calculation method of publishing royalties is the price of the book × the number of books printed or sold × the royalty rate; the calculation method of performance royalties for works such as drama, music, and dance is the total box office revenue × the royalty rate; the calculation method of recording royalties is the price of the recording × the number of recordings issued × the royalty rate. The royalty system is generally not applicable to the payment method for works published in newspapers and periodicals. The royalty rate is a percentage used to calculate the amount of royalties. Its level generally depends on factors such as the nature of the work, the author's reputation, and market demand. It is determined by negotiation between the author or his agent and the publisher. In the absence of an agreement, the relevant standards stipulated by the state shall apply. Reproduction royalties and public lending royalties are often seen in copyright laws and regulations in developed countries, and there are no relevant regulations in my country.

calculate

If it is a book, it is the price of the book multiplied by a certain percentage and then multiplied by the sales volume or print volume of the book. This certain percentage is called the royalty rate, and its size reflects the level of the royalty standard.

There is no uniform standard for royalty rates in most countries or internationally. The determination of royalty rates generally takes into account factors such as the author's fame, the type, quality and print run of the work, potential market demand and the degree of exclusivity of the authorized rights. The rates are negotiated between the author, copyright owner or his agent and the user of the work.

In a few countries, the government stipulates different royalty rates for different works. The royalty rate increases with the number of subsequent print runs. In some countries, the authors of musical or dramatic works are also paid royalties for performing them. This royalty is also called performance tax, which is calculated by multiplying the box office revenue of a single performance by a certain percentage (royalty rate).

Standards and Payments

The standard and payment method of royalties need to be determined by the copyright owner and the user of the work through verbal or written agreement. If it is a book, in general, the publisher must pay part of the royalties to the author before the work is officially published. This part of the royalties is called advance royalties. Advance royalties can be paid after the contract is signed, after the work is submitted, or after the sample book is printed.

The advance royalties are generally not less than 50% of the total estimated royalties. Most countries impose income tax on the royalties of authors or other copyright owners. China has also implemented a royalty system since the establishment of the copyright system in the early 20th century, but the royalties mentioned in the past often also included the original version of the printing plate to rent the version of the printing plate (rental fee) paid to the original version of the printing plate owner. In 1960, China stopped implementing the royalty system and replaced it with a remuneration system.

Advantages

The royalty system is a common payment method for the use of works in the international publishing industry. In recent years, my country has also gradually implemented it. Especially in Sino-foreign co-publishing, the royalty system is the main payment method. The royalty rate is generally between 6% and 10%.

Implementing a royalty system, linking intellectual creation with the market, and introducing a competition mechanism can promote the survival of the fittest in intellectual creation. In addition, the calculation of the royalty system is more scientific, reasonable, simple, and adaptable, and is less affected by currency fluctuations. It is also conducive to the development of copyright foreign trade.

Regulations

From the legislative level, the highest-level regulations in my country concerning the royalty system are the departmental regulations of the State Council, which are formulated by the National Copyright Administration. They mainly include the Regulations on Remuneration for Publishing Written Works (issued on April 15, 1999) and the Interim Regulations on Remuneration Standards for Statutory Licenses for Recordings (issued on August 1, 1993). Since the Copyright Law (revised on October 27, 2001) has greatly narrowed the scope of statutory licenses for recordings, the application of this regulation is also greatly restricted.

The word "royalty" is a foreign word, which was translated from the English word "royalty" in the early 20th century. Royalties are called "taxes" but they are not taxes, but taxable objects. People often confuse royalties with taxes. In fact, the two are different in meaning and calculation methods. Royalties tax is a kind of national tax, that is, royalty income tax. In my country's "Personal Income Tax Law", royalty income tax includes royalty tax.

In order to avoid ambiguity, it is recommended that the term "royalties" be abolished in future legislation and replaced with "copyright royalties", or "copyright royalties" for short. In fact, the term "royalty" contains the meaning of "copyright royalties". French language should not only be known by professionals, but also be easy for ordinary people to understand, at least not to cause misunderstanding.

Related systems

The royalty system is a common payment method for the use of works in the international publishing industry. In recent years, my country has also gradually implemented it. Especially in Sino-foreign co-publishing, the royalty system is the main payment method. The royalty rate is generally between 6% and 10%. The implementation of the royalty system connects intellectual creation with the market, introduces a competition mechanism, and can promote the survival of the fittest in intellectual creation. In addition, the royalty system is more scientific, reasonable, simple, and adaptable in calculation, less affected by currency fluctuations, and is also conducive to the development of copyright foreign trade.

From the legislative level, the highest-level regulations in my country regarding the royalty system are the departmental regulations of the State Council, which are formulated by the National Copyright Administration. They mainly include the "Measures for Remuneration for the Use of Written Works" (issued on September 23, 2014); the "Regulations on Remuneration for Publishing Written Works" (issued on April 5, 1999, abolished on November 1, 2014); and the "Interim Regulations on Remuneration Standards for Statutory Licenses for Recordings" (issued on August 1, 1993). Since the "Copyright Law" (revised on October 27, 2001) has greatly narrowed the scope of statutory licenses for recordings, the application of this regulation is also greatly restricted.

my country's "Regulations on Remuneration for the Use of Literary Works" stipulates the following:

Article 4. Royalty rate standards and calculation methods:

(I) Original works: 3%-10%

(ii) Derivative works: 1%-7%

If remuneration is paid in the form of royalties, the copyright owner may agree with the user in the contract that the user shall prepay the copyright owner royalties for the first actual print run or the minimum guaranteed circulation number when the work is delivered or the contract is signed.

If the number of copies of the first publication is less than one thousand, royalties shall be paid per thousand copies, but the royalties already paid shall not be paid again when the royalties are settled next time.

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