Rules on Music and Song Royalty Payments in Indonesia

A royalty is remuneration for the exploitation of the economic rights in a copyrighted work or related-rights product. In the music sector, royalties provide compensation to creators, copyright holders, singers, musicians, phonogram producers, and other related-rights owners when a song or piece of music is used for a purpose that generates an economic benefit.

Copyright arises automatically once a work is expressed in a tangible form. The protection consists of moral rights and economic rights. Moral rights concern the personal relationship between the creator and the work, while economic rights enable the creator or copyright holder to obtain economic benefits from the use of the work.

Economic Rights in Songs and Music

Economic rights include, among other matters, publication, reproduction, translation, adaptation, arrangement, distribution, performance, announcement, communication, and rental of works.

In relation to songs and music, commercial exploitation of these rights generally requires authorization and may create an obligation to pay royalties.

Because copyrighted works may be exploited in different ways, royalty arrangements are not uniform for every form of work.

For songs and/or music, royalty management is specifically regulated under rules governing the management of copyright royalties for songs and music.

Commercial Use Requires Royalty Payments

Commercial use of songs and/or music through public services generally gives rise to an obligation to pay royalties to creators, copyright holders, and/or related-rights owners.

Commercial use means the exploitation of a copyrighted work or related-rights product for the purpose of obtaining an economic benefit, whether directly or indirectly.

Commercial public services include a range of activities and publicly accessible places, such as commercial seminars and conferences, concerts, cinemas, exhibitions and bazaars, retail stores, television, radio, hotels, karaoke venues, restaurants, cafes, pubs, bars, bistros, nightclubs, and discotheques.

Accordingly, using songs to create an atmosphere in a business, entertain customers, accompany performances, or support paid services does not automatically become royalty-free merely because the music was obtained through a lawful streaming service.

A subscription payment to a digital platform is different from authorization to use music commercially in a public space.

Role of LMK and LMKN

Collective Management Organisations, or LMKs, and the National Collective Management Organisation, or LMKN, play an important role in collecting and distributing music royalties.

The system is intended to prevent commercial users from having to make separate payments to every creator or related-rights owner whose works are used.

Royalties collected are subsequently distributed to entitled parties based on usage data, membership, and the applicable distribution rules.

Management of repertoire data and identification of rights owners therefore plays an important role in ensuring that royalties reach the parties entitled to receive them.

Royalty Tariffs for Food, Beverage, and Entertainment Businesses

Under the material on which this article is based, royalty tariffs for commercial use of songs and music continue to refer to the ministerial decision approving the applicable royalty schedule.

Examples of tariffs for food, beverage, and entertainment businesses include:

• Restaurants and cafes: creator royalties of IDR 60,000 per seat per year and related-rights royalties of IDR 60,000 per seat per year.

• Pubs, bars, and bistros: creator royalties of IDR 180,000 per square metre per year and related-rights royalties of IDR 180,000 per square metre per year.

• Discotheques and nightclubs: creator royalties of IDR 250,000 per square metre per year and related-rights royalties of IDR 180,000 per square metre per year.

Royalties are paid at least once per year.

The method of calculation differs according to the type of business, and commercial users therefore need to identify the relevant category before calculating their obligations.

Allocation among Creators, Singers, and Producers

Commercial royalty tariffs distinguish between amounts allocated to creators and amounts allocated to related-rights owners.

Related-rights owners may include performers such as singers and musicians as well as phonogram producers, depending on the form of exploitation and the rights structure governing the recording concerned.

Further economic allocation among creators, singers, producers, labels, publishers, and other parties will generally depend on the contractual arrangements governing their relationships.

There is therefore no single percentage of revenue that necessarily applies to every song or recording.

Contracts should clearly address ownership, types of royalties, the basis for calculation, payment periods, territory, reporting mechanisms, audit rights, and circumstances in which works are used through digital platforms or subsequently exploited by third parties.

Obligations of Businesses

For restaurants, cafes, hotels, karaoke venues, shopping centres, concert organisers, and other businesses that use music as part of commercial activities, compliance does not end merely because they have lawful access to a music recording.

Users should ensure that licensing and royalty obligations relating to public use have also been satisfied through the applicable mechanism.

Companies should retain evidence of royalty payments, information concerning business capacity used for tariff calculations, licence agreements, and correspondence with royalty-management organisations.

Such documentation may be important for internal audits, compliance reviews, or the resolution of disputes concerning royalty calculations.

Legal Development Following the Constitutional Court Decision

A further development relevant to the framework discussed in this article arose from Constitutional Court Decision No. 28/PUU-XXIII/2025.

The Court interpreted the term “Every Person” in Article 23 paragraph (5) of the Copyright Law to include organisers of commercial performances.

It also held that the concept of “reasonable remuneration” under Article 87 paragraph (1) must be understood as reasonable remuneration determined in accordance with mechanisms and tariffs established by laws and regulations.

With respect to the application of the relevant criminal provision under Article 113 paragraph (2), the Court also required the prior application of restorative justice principles.

The decision further reinforces the importance of following the applicable licensing and tariff framework for both rights owners and commercial users.

Closing

Payment of music and song royalties is a consequence of exploiting the economic rights of a copyrighted work in commercial activities.

Users of music in public spaces need to distinguish between the right to privately enjoy a recording and the right to exploit music for business purposes.

For creators and related-rights owners, the LMK and LMKN system provides a mechanism for collecting and distributing royalties.

For businesses, complying with royalty obligations, maintaining usage records, and documenting payments form an important part of intellectual property compliance governance.