What is an example of a payment that could be considered a royalty?

A payment for publishing literary works is considered a royalty because it represents compensation to the author for the use of their intellectual property. Royalties are typically defined as payments made to the owner of a right, such as copyrights or patents, for the ongoing use of that property. In the case of literary works, when a publisher pays an author, it is to license the author's material and distribute it, which falls under the definition of royalty income.

In contrast, renting a conference room does not pertain to the use of intellectual property; it is simply a rental arrangement. Consulting services involve a fee for expertise rather than compensation for the use of someone's creative work. Similarly, payments for client invoices usually reflect payment for services or goods sold and do not qualify as royalties. Thus, the payment for publishing literary works distinctly matches the criteria for what constitutes a royalty.