A percentage of book sales revenue paid to an author.

The term applies to both independent publishing and traditional publishing.

In independent publishing, royalties are specified by each contract the author signs with a vendor or distributor. Typically, these royalties are specified as a percentage of gross sales revenue (that is, as a percentage of the cover price).

In traditional publishing, the publishing contract would specify the percentage and method of calculation for royalties, which could be based on either the net revenue (income after expenses) or gross revenue (retail price).

Initial royalties were applied to repaying the author's advance. Once the book had "earned out", subsequent royalties were paid to the author.