How Do Movie Royalties Work

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

However, it is essential 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, 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 but still reap the benefits of this passive income 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.

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

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


  • Sivan said on April 25, 2013
    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
  • lorna said on May 19, 2013
    If our house and grounds are the location for a film can the location receive Royalties from the films distribution?
  • Sydon said on October 8, 2013
    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?)
  • crijn said on October 27, 2014
    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?
  • Gerzain Sanchez said on December 30, 2014
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  • Concerned said on February 15, 2015
    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....
  • David K. McVicker said on October 7, 2019
    Hello, my question is in regards to the royalties and any revenue generated by a published book made into a movie, by an immediate family member who has deceased and left no estate or will. I've attempted to make contact with both book and movie agents, as well as the publishing company itself but to no avail. Other than hiring legal assistance, what would you recommend as to what hoops I'm going to have to jump through in order to resolve this matter? Thank you for your time and effort. Sincerely, D.K.Mc.


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