How Do Movie Royalties Work

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Movie producers, scriptwriters, studios, and actors enjoy royalties from the incomes generated by their creative works. But how do movie royalties work?

These incomes may come from the sales of DVDs, CDs, paid Internet downloads, and tickets from theaters.

Movies, just like songs and literary works, are considered as Intellectual Property (IP) or artistic work in which a person or organization has an exclusive rights especially in terms of financial gains. For this reason, people who are included in a movie production, such as scriptwriters, actors, and producers, will receive a royalty for every financial gain earned by their project.

However, it is important to note that the exact amount of royalties will depend on the pre-signed agreement and the money generated by the movie every time it is played on television channels and theaters and other establishments. Royalties also include the generated income from the sales of DVDs, CDs, and paid Internet downloads (of course, excluding illegal downloads from some P2P sites).
The good thing about movie royalties is that IP owners only have to work for a certain period of time but still reap the benefits of this passive income which is given for the rest of their lives (or until the IP expires).

But with the proliferation of Internet and file-sharing technologies that allow consumers to easily access movies without paying for them, the royalties of IP holders are at high stake. Fortunately for them, their exclusive and commercial rights on their creative works also come with copyrights which can prevent any person/organization from having financial gains from their movies.

However, a significant number of IP and copyright holders allow the use of their creative works as long as this is for non-profit reasons. But to be on the safe side, a person or organization should ask for the permission of film distributors or studios before using or showing any movies in public places.

And for those who are considering to use IP and copyrighted movies (and other creative works) for financial gains, they should contact the studios and ask for permission. Failing to do so is already considered a crime that if proven, may even result to imprisonment and paying costly legal damages.

6 Comments

  • 1. Sivan said on 4/25/2013 7:24:47 AM
    Hi, Are producers, actors, writers and directors the only ones who are entitled to royalties? What about video editors, sound designers etc? Kicha Studios, Israel
  • 2. lorna said on 5/19/2013 7:28:36 PM
    If our house and grounds are the location for a film can the location receive Royalties from the films distribution?
  • 3. Sydon said on 10/8/2013 8:59:02 AM
    Hi, if I sell movies do I only pay royalties to the Studio owning the rights or do I also have to contact collecting societies in each country where the movie will be sold? (as for music?)
  • 4. crijn said on 10/27/2014 9:35:35 PM
    Hi, out of curiosity, when a TV channel plays a movie, do they pay royalties? is there anywhere to find out if a particular movie, the amount of royalty is paid by a TV channel?
  • 5. Gerzain Sanchez said on 12/30/2014 1:57:08 PM
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  • 6. Concerned said on 2/15/2015 11:18:04 PM
    why is an actor paid every time a movie played and not just the initial money paid to act in it? I mean brad pitt does not pay GM every time he drive his corvette....
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