The term “royalty” can be used in several contexts. The common thread between contexts is that it is a sum of money paid to an entity for a certain right or capacity. A license fee can be an amount of money paid by an individual or a business to a government agency for the privilege of providing a certain service or engaging in a specific industry. Many types of professions require licenses to participate in the profession. These licenses are usually issued after a certification exam or after the end of compulsory training hours. A license fee may also describe an amount paid to use an item protected by copyright, such as a photograph or logo, which belongs to someone else. A professional has his license, he holds a license.
Breakdown of license fees
Examples of license fees paid to participate in a certain industry or profession include, among others, restaurants and cosmetologists. Restaurants must obtain a liquor license and pay a liquor license fee to serve spirits. Hairdressers must pay license fees and obtain a cosmetology license to operate their business. License fees, combined with fees to obtain the training necessary to qualify for the license, create barriers to entry into the licensed professions. These barriers to entry can be easily overcome if the party wishing to join a profession undergoes the necessary certification process. However, the time and investment required to obtain certification and the fees associated with this procedure can increase the costs of the services offered by authorized suppliers.
Example of license fees
An example of a license fee paid to use a copyrighted item would be the owner of a t-shirt business wishing to sell t-shirts printed with the logo of a Major League Baseball team. The owner of the t-shirt company should obtain permission from Major League Baseball and possibly the permission of the team itself in addition to paying license fees to obtain the license required to use the image. .