Regulations on royalty distributions to musicians signed by President Joko Widodo

President Joko Widodo on 30 March 2021 signed Government Regulation No.56/2021 on Royalty Management for Song and/or Music Copyright (PP 56/2021). This government regulation is issued to complement creator’s royalty management regulations.

“The regulation came very late, almost seven years after the Copyright Law was enacted. The implementing regulations for a law should be completed no later than two years after the law comes into effect,” said Hafez Gumay, an advocacy manager at the Indonesian Art Coalition on its press release.

Initially, according to Article 89 paragraph (1) and (2) of Law No.28/2014 on Copyright (Copyright Law), royalty management was mandated to a collective management organisation (LMK). However, in reality, the creator, copyright holder, or the relevant rights owner can choose that the royalty is managed by someone or an LKM based on power of attorney. Management by LMK gives more legal certainty for creators because in order to be able to perform their job, an LMK must obtain operating license from the related ministry (Article 88 paragraph (1) of Copyright Law). 

Regulations related to tariff setting in royalties for commercial use of songs and/or music have been regulated in the Law and Human Rights Ministerial Decree Number HKI.2.OT.03.01-02 of 2016 on Ratification of Royalty Rates for Users Who Make Commercial Use of Creations and/or Rights Products Related to Music and Songs.

The decree states that business fields/activities that are required to pay royalties include commercial seminars and conferences, cafés, bars, pubs, restaurants, bistros, nightclubs, music concerts, airplanes, buses, trains, ships, exhibitions, bazaars, cinemas, telephone waiting tones, banks, offices, shops, recreation centres, television broadcasting institutions, radio broadcasting institutions, hotels and hotel facilities, and karaoke businesses.  

Government Regulation No.56/2021 added new elements to optimise the distribution of royalties, such as an obligation for LMK to establish a Song and/or Music Information System (SILM). SILM will later become the basis for calculation before the distribution of royalties is carried out to prevent mistakes in the amount of royalties that should have been received by creators. 

According to Article 22 of Government Regulation No.56/2021, SILM must be formed no later than two years after the enactment of this government regulation (31 March, 2021) and SILM development can be carried out with third parties in accordance with the law.

The government will also establish a song and/or music data centre that will serve as a data bank that stores various information related to song and/or music rights ownership consisting of creators, copyright holders, related rights owners, as well as copyrights and related rights.

All of this data will then be managed and reviewed periodically by the Director General of Intellectual Property Rights every three months or a certain period of time for renewal. This innovation will make it easier for LKM to pay royalties to those who are entitled to receive them.

To be able to obtain protection and management of royalties by LMK, every creator, rights holder, or related rights holder is required to register their song and/or music either personally or through their proxy to the minister (Article 4 paragraph (1) of Government Regulation No.56/2021). Each song and/or music that is registered will be entered into the song and/or music data centre.

Creators who have not registered their songs and/or music with LMK can still get royalty. This is because Article 15 of Government Regulation No.56/2021 requires the national LMK to save and announce royalties to creators who have not been registered for two consecutive years. In order to claim the royalty, the creator must first register him/herself as a member of an LMK.

Protection of creators' economic rights to playback via streaming music applications is still not specifically explained in this government regulation. So far, music streaming apps, such as Spotify and Joox, have made royalty payments to artists.

However, as explained by Antonio Rajoli Ginting in his journal titled The Role of National Collective Management Organisations in the Development of Music Streaming Applications uploaded in 2019, the problem that occurs even though royalties have been paid is that there is no legal umbrella regulating the minimum royalty rates on music streaming applications. Spotify, for example, sets the tariff at approximately $0.006 per song playback, which is taken from subscription fee. The amount can also differ depending on the subscription plan selected by the user.

"In the end, regulations regarding copyright will not be effective if the public has no awareness to respect the works of artists," said Hafez. “Never consider the obligation to pay royalties as a form of greed for musicians. Without the music and songs they created, our life would be lonely. Royalty is a right that musicians deserve for their services to inspire us all with their work, as well as a form of our appreciation for the artistic achievements of our fellow humans. It's time for us to appreciate the art that makes us alive."

It is hoped that with this government regulation, the national LMK can immediately exercise its authority to determine the minimum tariff for music streaming. In addition, Government Regulation No.56/2021 is open to the addition of certain business sectors in collecting royalties (Article 3 paragraph (3)).