A royalty payment is one made to an owner for the use of their property, most commonly patents, copyrighted works, franchises or natural resources. The use of the owner's property is for the purpose of generating revenue or other desirable activities. Royalties are usually legally binding and made out to compensate the owner for the asset's value.
Royalties are often expressed as a percentage of the revenues generated from the use of the property, but can be negotiated. As an example, Microsoft charges computer manufacturers royalties for the use of their Windows operating system on those computers.