Royalty Income is an awesome passive type of income. Of course, there is work in the beginning. One must create something or gain the rights to something that we can monetize. The next step would be selling that product or finding a company that can utilize our idea/invention/creation. The last step would be gathering the paperwork that will confirm the agreement to pay us a Royalty in perpetuity, hopefully. These steps will put us in a position to receive passive income for the rest of our lives. This situation all sounds great, but how do we get here? What can we create that we could sell the rights for others to use? How can we get to this point if we are not inventors/creators? How can we use one royalty stream of income to create more?
Let’s start off with the point of view of an inventor/creator. We are constantly thinking and creating. Ideas come to us even when we are attempting to stop them. We are constantly stimulated by what we see, hear, or feel that we can’t help but think of solutions to problems or create something from nothing. Thinking of solutions to problems is the way to make money in this world. Solving people’s problems will make one rich. If we feel we have a gift in this area, we should concentrate on one issue that will provide the most relief for the populous. Yes, just one. Create the solution, test it, protect it (patent), and find a company that can get that solution out to the masses. Yes, we can start our own company, but we are ultimately looking for passive income. Finding a company that can utilize our solution and cut us a check for the privilege of using it. That is royalty income. A beautiful reward for solving one of the world’s many issues.
A musician/recording artist also makes most of their money from Royalty income. They are notoriously known for signing into bad contracts, but I digress. Musicians make money for creating music. The usual agreement is they give this music to a record label and agree to receive a royalty of 10-20% of sales/streaming/other revenue of that music. This deal favors the record label, but the passive royalty income for the musician still stands. They make a song once and get paid for the use of it. I must state that this is a terrible deal for the musician in 95% percent of these deals. If we are musicians, we are better off creating music and promoting our published work alone. 100% of $50,000 is easier to make than 10% of $500,000 from a major label. Remember, we work at the start then the passive income comes later. In this scenario, it will come to us in way bigger chunks while touching fewer hands before getting to us.
Okay, great, but what about those of us who are not creators/inventors. It’s simple. We’ll need to find these creators/investors and buy their patented ideas/inventions. It sounds like a predatory action because it is. We must be okay with this and understand some creators/inventors are just that and have no business bones in their bodies. That is where we come in. We take the invention and shop it at the company that can give us the royalty deal we are want. Remember, there are no free rides to passive income. We’ll need to find the right business to partner with and amass the funds required to buy the rights to ideas that weren’t ours. Knowing this, we should be more comfortable receiving those royalties once we get to that point.
In closing, royalty income is a stream of income we can achieve without skill, money, or ideas. We need to realize where we fit in that sentence and operate accordingly. Once we obtain a royalty agreement, we can turn that into multiple. How? Finding another need of the company we are in business with. Creating music for others is another answer, if we are musicians. Founding an angel investment company with the funds from the initial royalty agreement works too. This approach will make 1 create the potential of hundreds. Royalty Income is something we should all decide to add to our streams of income.
Food for thought. You do the dishes!
