Royalty payments are fees paid by a licensee  (such as a publisher or production company) to a licensor (such as a picture book illustrator or author) for continued rights to use an asset (such as an intellectual property or series of commissioned illustrations). Royalty payment structures are established in contracts and agreements between creators and their clients. In book publishing, royalties (a small portion of each book sale)  are paid to the author or creator after a book earns back an established amount of money to offset its production costs.