Copyright is the exclusive right of the creator that arises automatically once the work is materialized in a tangible form and published. One of the creations protected by copyright is songs and/or music. The exclusive rights of the creator consist of two types: moral rights and economic rights. Moral rights include the right to have the creator’s name credited when the work is used by others. This right is permanently attached to the creator. Economic rights, on the other hand, are the rights to gain economic benefits from the use of the copyrighted work, usually provided in the form of payments known as Royalties, as defined in Article 1, number 21 of Law No. 28 of 2014 on Copyright (“Copyright Law”).
Therefore, creators, copyright holders, or related rights owners are entitled to Royalties as compensation for the utilization of their economic rights, particularly when their work is used commercially in public services. “Public services” include:
- Commercial seminars and conferences;
- Restaurants, cafes, pubs, bars, bistros, nightclubs, and discotheques;
- Music concerts;
- Aircraft, buses, trains, and ships;
- Exhibitions and bazaars;
- Cinemas;
- Telephone hold music;
- Banks and offices;
- Shops;
- Recreation centers;
- Television broadcasting institutions;
- Radio broadcasting institutions;
- Hotels, hotel rooms, and hotel facilities; and
- Karaoke businesses.
Based on Article 37 of the Regulation of the Minister of Law and Human Rights Number 9 of 2022 on the Implementation of Government Regulation Number 56 of 2021 concerning the Management of Royalties for Copyright on Songs and/or Music (“Permenkumhan No. 9/2022”), basically, anyone can commercially use songs or music in the form of commercial public services by applying for a License to the Copyright Holder or the owner of Related Rights through the National Collective Management Institution (“LMKN”), and the License agreement is then recorded by the Minister of Law and Human Rights (Kemenkumham).
LMKN has the authority to collect, gather, and distribute Royalties from commercial Users.
According to Article 87 paragraph (1) of the Copyright Law, every member of the community, including Creators, Copyright Holders, and Rights Owners, must become members of an LMK to collect royalties for the use of their song and/or music creations in commercial public services.
An LMK is a nonprofit legal entity that has received permission from the Ministry of Law and Human Rights and is authorized to represent and act on behalf of Creators, Copyright Holders, and Rights Owners to manage their economic rights by collecting and distributing Royalties.
Currently, there are 11 LMKs in Indonesia, namely:
- Karya Cipta Indonesia (KCI);
- Wahana Musik Indonesia (WAMI);
- Royalti Anugrah Indonesia (RAI);
- Pencipta Lagu Rekaman Indonesia Nusantara (PELARI);
- Sentra Lisensi Musik Indonesia (SELMI);
- Perlindungan Hak Penyanyi dan Pemusik Rekaman Indonesia (PAPPRI);
- Anugrah Royalty Dangdut Indonesia (ARDI);
- Anugrah Royalti Musik Indonesia (ARMINDO);
- Star Musik Indonesia (SMI);
- Performers Rights Society of Indonesia (Prisindo);
- Penyanyi Profesional Indonesia Timur (Prointim).
Therefore, the distribution of royalties to Creators, Copyright Holders, and Related Rights Owners for the use of songs and/or music by Users for commercial purposes must go through an LMK, provided they are members of an LMK. The LMK is authorized by the Creator, Copyright Holder, or Rights Owner to manage their economic rights by collecting and distributing royalties.
However, if the Creator, Copyright Holder, or Rights Owner is not yet a member of an LMK, Article 20 paragraph (4) of Permenkumham No. 9/2022 states that royalties for Creators, Copyright Holders, and Rights Owners who are not members of an LMK can only be collected and gathered by LMKN. For two years, LMKN will store and announce these royalties to be claimed by the Creators, Copyright Holders, or Rights Owners.
Furthermore, if within the two-year period the Creator, Copyright Holder, or Rights Owner is identified and/or becomes a member of an LMK, the royalties will be distributed to them. On the other hand, if within that period the Creator, Copyright Holder, or Rights Owner is not identified and/or does not become a member of an LMK, the royalties may be used as reserve funds.
Based on the above explanation, Creators, Copyright Holders, or Related Rights Owners who are not yet registered as LMK members can still receive royalties through LMKN as long as the song is identified. “Identified” means that the song and/or music creation has been recorded in the general list of creations and included in the song database.
Summary of the Royalty Collection Process by LMKN
User applies for a license to the copyright holder or related rights owner through LMKN.
The license agreement is recorded by the Minister of Law and Human Rights in the general register of Copyright License Agreements, subject to a fee.
User must submit a report on the use of songs and/or music to LMKN through the song and/or music information system.
User pays royalties to the Creator, Copyright Holder, or Related Rights Owner through LMKN.
LMKN collects royalties and determines the amount of royalties, coordinating with LMKs according to common practice and fairness.
All royalties collected and held in the LMKN account can be accessed by all LMKs.
LMKN distributes royalties based on user reports of song and/or music data in the song and/or music information system to Creators, Copyright Holders, and Related Rights Owners.
If you require Legal Consultation, you can contact us through:
Email: Secretary@mnllaw.co.id
Phone: 0812 9539 7825 / 0813 98941976