Royalty Interest

A right to receive a share of the revenue from an asset such as a song catalogue, a patent or mineral production.

Example

Owning the right to a share of streaming income from a catalogue of songs.

Royalty income usually declines over time as the underlying asset ages. Pricing it as a flat yield overstates its value.

Cash Rent Yield — The annual rent received from leasing an asset such as farmland, divided by its price.

Most alternative assets pay you nothing until the day you sell — Art, wine, watches and domains produce no income at all while you hold them - the return exists only as a price someone else agrees to pay later. A small minority of alternatives, like farmland and royalty rights, are genuinely different because they generate cash along the way. (9 min)
For most alternatives, the entire return is one number: the exit price minus everything paid to get there — Without a dividend or a coupon, appreciation is the whole story for art, wine and watches - and it only becomes real at an actual sale. Farmland and royalty interests instead compound the way an income-producing asset does, cash paid out year after year. (11 min)