This document summarizes Indonesia's copyright system for collecting and distributing music royalties. It outlines the country's historical copyright laws and regulations. The current system is governed by Law 28/2014 and Government Regulation 56/2021, which established the National Collective Management Institution (LMKN) to collect royalties from music users and distribute them to rights holders. The system requires a Song and Music Information System (SILM) database to be developed by 2023 to facilitate royalty management, though it has not been completed. The document compares Indonesia's system to that of the US and identifies some potential legal issues in Indonesia's mechanisms.

1. System for Collecting and Distributing
Music and/or Song Royalties in Indonesia
Legal Brief

2. Historical Overview of
Copyright Laws and Regulations
First Copyright Law in Indonesia,
however it is now invalid and has
been replaced.
Law 19/2002
01
Replaces Law 19/2002 and redefines
Copyright, introduces new terminologies,
provides longer period, among other
changes.
Law 28/2014 02
Acts as the implementing regulation for Law
28/2014, which regulates the management
of royalties and copyrights of music and/or
songs regarding (i) royalties from
commercial public service, (ii) music and/or
songs data centre, and (iii) royalty
management by LMKN. It also specifically
introduces SILM, which is a database
system for reporting royalty distribution.
Article 22 GR 56/2021 provides that SILM
must be developed within 2 years since
its enactment.
GR 56/2021
03
Acts as the implementing regulation for
GR 56/2021, which specifically regulates
on LMKN and LMK in respect to royalty
management.
MoLHR Reg. 9/2022 04
INDONESIA’S
COPYRIGHT SYSTEM
SILM 05
Sistem Informasi Lagu
dan/atau Musik
(Song and/or Music
Information System)
Commercial
Use
Author
License
Creation
Royalty
Any creative work in the fields of science, art
and literature that is produced on inspiration,
ability, thought, imagination, dexterity, skill or
expertise expressed in a tangible form.
A person or several people who
individually or jointly produce a Creation
that is unique and personal in nature
Compensation for the utilization of the
economic rights of a Creation or Related
Rights received by the Author, Copyright
Holder, and/or Related Rights Owner.
Utilization of Creation and/or Related
Rights products with the aim of obtaining
economic benefits from various sources
or for a fee. The person who conduct
Commercial Use is referred to as User.
Written permission given by the Copyright Holder
or Related Rights owner to other parties to
exercise economic rights over their Creation or
Related Rights products under certain conditions.
A H R P L e g a l B r i e f

3. STAKEHOLDERS
An implementing element
of the Indonesian Ministry
of Law and Human Rights
(“MoLHR”) which has the
task of carrying out the
formulation and
implementation of policies
in the field of intellectual
property in accordance
with statutory provisions.
Government aid agency
which has the authority to
collect and distribute
Royalties as well as manage
the interests of the economic
rights of Authors and Related
Rights owners in the field of
songs and/or music.
An institution in the form of a
non-profit legal entity that is
authorized by the Author,
Copyright Holder, and/or
Related Rights owner to
manage their economic
rights in the form of collecting
and distributing Royalties.
The Directorate
General of
Intellectual Property
(DJKI)
Lembaga
Manajemen
Kolektif Nasional
(LMKN)
LMK Representing
Related Rights Owner
LMK Representing
Author
• carrying out Royalty Management
• formulating the LMK code of ethics
• formulating SOP related to Royalty
Management
• determining the system and procedure for
calculating Royalty payments from User to
LMK
• determining the system and procedure for
calculating Royalty payments from User to
LMK
Main Functions
Lembaga
Manajemen
Kolektif
(LMK)
A H R P L e g a l B r i e f

4. APPLICATION OF OPERATIONAL
PERMIT OF LMK
MoLHR
Submit application
and fulfill
requirements
MoLHR Delegate
Administrative
Examination
The Issuance of LMK’s
Operational License by the
Minister
No
Applicant
1
Examine LMK’s application
2a
2
Yes
Factual Examination
3
5 business days
Return the application
Re-submit the application
10 business days
5 business days
No Yes
2b
2c
Application
declined
4
Requirements for LMK to obtain Operational License are:
a. in the form of a non-profit Indonesian legal entity
b. obtain authorization from Author, Copyright Holder or
Related Rights Owner to collect and distribute
Royalties
c. have authorizers as members of at least 200 Authors
for LMK representing the interest of Authors and at
least 50 people for LMK representing the interest of
Related Rights Owners
d. aims to collect and distribute Royalties
e. able to collect, collect and distribute royalties to
creators, copyright holders or related rights owners.
Applicants must submit required documents, at least:
a. copy of deed of establishment;
b. management structure;
c. articles of association;
d. guidelines for financial management and/or royalty distribution;
e. list of names of LMK members;
f. copy of authorization from Authors;
g. Statement letter not to become a member of another LMK for the same
rights;
h. copy of identity card of LMK management;
i. list of Creation and/or Related Rights managed by LMK;
j. recommendation from LMKN; and
k. statement of being able to withdraw, collect, and distribute Royalties to
Authors, Copyright Holders, or Related Rights Owners.
A H R P L e g a l B r i e f

5. FINANCES
80%
20%
Distributed to Authors,
Copyright Holders, and Related
Rights Owners who have
become members of LMK
Distribution of Collected Royalties
Operational Funds
• LMK uses operational funds at most
20% of the total amount the royalties
collected annually include the
operational costs of the LMKN.
• Operational Funds are used to support
the activities of carrying the duties of
LMKN’s commissioners and on duty
officers.
• The use of LMKN’s Operational Funds
is carried out based on the annual
budget plan approved by the LMKN
plenary meeting.
Reserve Funds
A H R P L e g a l B r i e f
• Reserve funds are
Royalties that:
o song and/or music
usage is not submitted
by its Author;
o there are still disputes
between owners; or
o Authors, Copyright
Holders, and/or Related
Rights owners have not
been registered as LMK
members.
• Royalty would be held
for 2 years to be known
by the relevant Author. If
later it is known or non-
registered Author has
become the member of
LMK, the royalty may be
distributed to the
relevant Author.
Otherwise, such Royalty
will be used as
Reserved Fund.
• Reserve funds can be
used by LMKN for:
o music education;
o social or charity
activities;
o social security for
members of LMK;
and
o socialization of
Copyright and
Related Rights
related to royalty
management
• LMKN conducts
financial audits and
performance audits on
Reserve Funds which
carried out by public
accountants at least
once a year and the
results are announced
to the public through
electronic media and
print media
• The amount of Reserve
Funds is determined on
an agreement in the
LMKN plenary meeting.

6. COMMERCIAL USE
There might be an amendment or a new
prevailing regulation against the current MoLHR
Decree regarding to the Royalty tariff for Users
that conduct Commercial Use on the date this
publication is published
Commercial use of
public services for
Authors or Copyright
Holders, regardless in
the form of analog or
digital, is including:
Shows of Creation
Anyone can make Commercial Use of songs and/or music in the form of commercial
public services by paying Royalties to Creators, Copyright Holders, and/or Related
Rights owners through LMKN
• Broadcasting
• Communication
Announcement of
Creation
Communication
of Creation
Royalty tariff for Users that
conduct Commercial Use refers
to the MoLHR Decree No,
HKI.2.OT.03.01-02/2016
Seminar and
Commercial
Conference
Restaurant,
Café, Pub,
Bar, Cafe
Music
Concert
Airplanes,
Buses, Trains,
and Ships
Exhibition and
Bazaar
Cinema
Theater
Ring Back
Tone
Banks and
Offices
Shops
Recreation
Center
TV & Radio
Broadcasting
Hotels, Hotel
Rooms, and Hotel
Facilities
Karaoke
Business
A H R P L e g a l B r i e f

7. SILM
SILM is the Information and data systems used in the distribution of song and/or music royalty. According to the GR
56/2021, in carrying out the making and development of SILM, LMKN can cooperate with third parties in accordance
with the laws and regulation. LMKN shall bulld the SILM no later that 2 years since the promulgation of the GR
56/2021 which 1 April 2023
LMKN has appointed PT Lentera Abadi Solutama as the developer of SILM in 2021
LMKN manage SILM, and can be accessed by Author, Copyright
Holder, Related Rights Holders, Users, LMKN and LMK for royalty
managing purpose
Consist information related to the details of
Related Rights Holders, Copyright Holders,
Users, Author, Related Rights
A H R P L e g a l B r i e f

8. COLLECTION AND
DISTRIBUTION OF
MUSIC ROYALTIES
Author
Author may be
registered/not
registered as a
member of LMK
Copyright
Holder
Related Right
Holder
Proxy
Application to List
a Song/Music
Song/Music
Data Center
SILM
Integrated
Prior
conducting a
Commercial
Use, it shall
submit License
Application
License
Application
User
Royalty Withdrawal
Commercial
Use
1
2
3
4
Amount of royalty withdrawal
is based on the report of the
use of the song/music to
LMKN through SILM.
Royalty distribution
conducted at least 2
times in a year
Royalty
Distribution
LMK
After deduction of
Operation Fund
Royalty
Distribution
Royalty would be held for 2 years to be known
by the relevant Author. If later it is known or
non-registered Author has become the member
of LMK, the royalty may be distributed to the
relevant Author. Otherwise, such Royalty will be
used as Reserved Fund.
A H R P L e g a l B r i e f

9. COMPARISON – U.S. ROYALTY
MANAGEMENT
A H R P L e g a l B r i e f
• The United States of America
(“U.S.”) is one of the countries with
the longest history of intellectual
property rights (“IPR”). U.S.
arranges song copyrights as IPR
through U.S. Copyright Office
which conducts registration of
song copyrights through their
website.
• However, U.S. Copyright Office
only conducts registration of
copyrights without arranging the
management of songs and music
copyright or royalty of copyrighted
song.
• The implementation of Royalty
Management in the U.S. is
conducted by parties acting as
intermediary between copyright
holders and User.
• The U.S. system differentiate
license of copyrighted song and/or
music into two main categories,
namely Performing Rights and
Mechanical Rights. The Royalty
Management for Performing
Rights is managed by Performing
Rights Organization (“PRO”) and
the Mechanical Rights is managed
by Mechanical Rights Organization
(“MRO”).
Collective
Management
Organization (“CMO”)
Performing Rights
Organization (“PRO”)
Two largest in the U.S.:
Mechanical Rights
Organization
(“MRO”)
Collaboratively develop:
Songview’s system ingests song ownership
information from ASCAP and BMI, processes and
reconciles that information based on agreed-upon
rules, and then sends the reconciled data back out to
each PRO’s public searchable databases.
Songview’s system is a comprehensive data platform
that provides ownership data of performing rights in
the United States and shares the administration for a
most of the licensed music.
Mainly divided into
Registration of
Creation
Royalty Management
Royalty Management
Information System
Through U.S.
Copyright
Office’s
website
Through DJKI
system, stored
in Song and/or
Music Data
Center
Conducted by
CMOs, the
largest being
ASCAP and
BMI
Conducted
by LMKN
and LMK
State’s system,
conducted
through SILM
(upon
completion)
Private
enterprises’
system, one
of it being
Songview
Comparison

10. POTENTIAL LEGAL ISSUES OF ROYALTY
MANAGEMENT MECHANISM IN INDONESIA
01
02
03
04
Although the provisions of laws and regulations have mandated LMKN to build SILM
no later than 2 years since the promulgation of PP 56 2021. However, until the date
of this publication LMKN has not been able to complete the mandate, regardless of
the fact that LMKN has appointed PT Lestari Abadi Solutama since 2021
According to the Art. 3 jo. Art. 10 GR 56/2021, in order for LMKN to collect royalties, Users are
required to submit a license application to Copyright Holders or Related Rights owners through
LMKN. Nevertheless, there are circumstances which a loophole would occur in which there is a
potential issues when the User does not apply for a License prior conducting a Commercial Use.
According to the Art. 10 (2) GR 56/2021, a performer may use a song/music without
a prior obtaining license agreement. Nevertheless, a performer should pay
royalties. Therefore, an issue may occur in how the LMKN enforces the royalties
payment obedience over the performer.
GR 56/2021 draws the royalty payment obedience entirely depending on the self-act of users (i.e.,
license application, and report of song/music usage) without any monitoring instrument given to
LMKN as an institution with authority to collect and distribute royalties.
05
According to Art. 3 (2) (b) GR 56/2021, conducting commercial use in the form of
organizing music concerts is required to prior obtaining a license, and vice versa to
Art. 10 (2) GR 56/2021, whereby stipulates a performer may use a song/music
without prior obtaining a license. An issue may occur because there is no clear
interpretation between music concerts and song/music performers since music
concerts contain song/music performers.
A H R P L e g a l B r i e f

11. We will continue to follow the developments on this topic and provide additional information as it
becomes available. If you have any questions on this topic, please contact:
M. Fadra Heryndra
fadra@ahrplaw.com
Gradita Maharani Purukan
gradita@ahrplaw.com
Radhitya Hawari
radhitya@ahrplaw.com
This publication has been prepared by AHRP for educational and informational purposes only. The information contained in this publication is not
intended and should not be construed as legal advice. Due to the rapidly changing nature of law, AHRP makes no warranty or guarantee concerning
the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your
circumstances before deciding to take any action.
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