News

September 2025

Monday, 15 Sep 2025

Guide to Copyright Royalties for Songs and/or Music for Business Owners

 

 

The discussion of royalties or compensation for the use of the economic rights of a song and/or music creation in Indonesia is closely related to the existence of the National Collective Management Organization (“LMKN”) and Collective Management Organizations (“LMK”).

LMKN is a non-budgetary government support institution established by the Minister of Law to collect, manage, and distribute royalties to creators, copyright holders, and related rights holders. Meanwhile, LMK is a non-profit institution founded by creators, copyright holders, and related rights holders that operate under the coordination of LMKN and functions to assist in managing these economic rights, particularly in distributing royalties from LMKN. Therefore, LMKN operates at the national level and there is only one LMKN in Indonesia, while currently there are 16 LMKs that have obtained operational licenses, including Wahana Musik Indonesia (WAMI), Karya Cipta Indonesia (KCI), Sentra Lisensi Musik Indonesia (SELMI), and Produser Fonogram Rekaman Seluruh Indonesia (PROFESI).

The regulation of royalties was established by the Government in 2021 through Government Regulation No. 56 of 2021, which was further clarified by Minister of Law and Human Rights Regulation No. 9 of 2022 detailing the roles of LMKN and LMK. Nevertheless, various controversies have arisen in society, culminating in:

(i)  the case of who is responsible for paying royalties when a singer performs another party’s song at a concert, and

(ii)  the case of royalty payment obligations by a fast-food restaurant in Bali.

In response to these cases and to provide legal certainty regarding royalty payments to creators /copyright holders and related rights holders, the Government issued Minister of Law Regulation No. 27 of 2025 concerning the implementation of Government Regulation No. 56 of 2021 on the management of copyright royalties for songs and/or music (“Ministerial Regulation 27/25”).

In addition to technical aspects such as the position, authority, duties, and organizational structure of LMKN and LMK, there are several key points that business owners or commercial music users in public spaces need to pay attention to, particularly regarding royalty payment obligations:

  1. Any commercial use of songs and/or music, whether in analog form such as playback in restaurants, hotels, or concerts, or in digital form such as through streaming platforms, is subject to royalty payments to the creators, copyright holders, and related rights holders through LMKN.

    This obligation applies to both local and foreign music, and covers physical media (such as CDs, radio, and live performances) as well as digital media (such as Spotify, YouTube, and Apple Music), if the music is used in public spaces or for commercial purposes. 

  2. Commercial use of music can be carried out in two ways:

    (i)    by applying for a license and paying royalties to LMKN, or

    (ii)    simply by paying royalties without a licensing agreement.

    Licensing is typically required for special, intensive, or long-term use, such as large-scale concerts, theatrical performances, or using music as a permanent background in apps, games, or websites. Meanwhile, royalty payments without a license are generally made for public use, such as playing music in cafés to create a pleasant atmosphere, or in salons for customer relaxation.

  3. License applications are submitted through the Integrated Song and/or Music Information System which is connected to the Central Song and/or Music Database. Based on the author's research in the database of the Directorate General of Intellectual Property (DJKI), songs and music are categorized into three main groups: creators, performers, and recordings.

  4. The obligation to pay royalties for the commercial use of songs and/or music in public services lies with the event organizer or business owner. This means that parties such as event organizers or owners of restaurants and hotels are responsible for arranging royalty payments to LMKN for the use of music in their events or business premises.

  5. Ministerial Regulation 27/25 provides detailed descriptions of commercial public services, both analog and digital. Analog forms include physical spaces such as hotels, restaurants, fitness centers, public transportation, cinemas, and tourist attractions, where music is used to enhance the business atmosphere. Digital forms include streaming platforms, video-on-demand services, online radio, and live broadcasts via the internet. Both forms, if used commercially, are subject to royalty obligations.

  6. LMKN has the authority to collect royalties for the commercial use of songs and/or music, whether the creators and rights holders are members of an LMK or not. Therefore, even if a creator has not joined a specific LMK, LMKN still has the right to collect royalties for the use of their works and distribute them according to the applicable mechanism.

  7. The guidelines for determining royalty rates are set by LMKN and approved by the Minister of Law. The latest guideline is regulated through Ministerial Decree Number HKI.2.OT.03.01.-02 of 2016 concerning the Approval of Royalty Tariffs for Commercial Users of Songs and Music. To assist business operators, LMKN provides royalty rate information and a royalty calculator simulation on its official website, particularly under the section “Licensing for Business and Commercial Use.”

  8. Commercial use of songs and/or music without permission or royalty payment constitutes a violation of the economic rights of creators and related rights holders. Under Law Number 28 of 2014 on Copyright, such violations may be subject to administrative sanctions in the form of written warnings and fines, as well as criminal sanctions with penalties of up to 10 years imprisonment and/or a maximum fine of IDR 4 billion, depending on the severity of the violation and the resulting damages.

Based on the points above, it can be concluded that any activity involving the playback or use of songs and/or music in public spaces for commercial purposes, whether in analog or digital form and including both local and foreign works, is subject to royalty payment obligations, as it involves the economic rights of creators and related rights holders.

For small and medium-sized business operators who are still considering operational cost efficiency, there are alternative options that can be considered, such as using songs and/or music whose copyright protection period has expired (already in the public domain), or creating their own jingle that has been registered as a sound mark. By doing so, business owners can still create a distinctive atmosphere for their business without violating applicable legal provisions.

 

 

Disclaimer: This legal news serves as general guidance only and should not be treated as legal advice. If you wish to have further information on this topic, please contact  Diyah Ratnajati (dratnajati@rosetini.co.id), or Rosetini Ibrahim (ribrahim@rosetini.co.id).