Don’t Play Music in Your Business Premises Without Permission! Understand the Royalty Payment Mechanism

Introduction

Playing songs or music in business premises such as restaurants, cafés, and retail stores is an effective way to create a pleasant atmosphere and attract customers. However, it should be noted that the use of musical works for business operational purposes cannot be carried out indiscriminately.

Any music played in a public area for commercial purposes has economic value, the rights to which are fully protected by the State. In line with the strengthening of copyright policies, the Government has further emphasized the obligation of businesses to pay royalties for the commercial use of musical works. Compliance with these requirements not only fulfills legal obligations but also serves to mitigate the risk of sanctions and legal disputes while supporting the protection of the economic rights of songwriters and copyright holders.

Legal Basis

Law Number 28 of 2014 on Copyright (“Law 28/2014”)

Article 9 paragraph (2)

“Any Person exercising the Economic Rights referred to in paragraph (1) must obtain the permission of the Creator or Copyright Holder.”

Article 113 paragraph (3)

“Any Person who, without rights and/or without the permission of the Creator or Copyright Holder, infringes the Creator’s Economic Rights as referred to in Article 9 paragraph (1) letters a, b, e, and/or g for Commercial Use shall be subject to imprisonment for a maximum of four (4) years and/or a fine of up to IDR1,000,000,000.00 (one billion rupiah).”

Playing songs in commercial premises is categorized as a form of “Communication of a Work to the Public.” Law 28/2014 provides that any person intending to derive economic benefit from another person’s copyrighted work must first obtain authorization. Accordingly, playing music in a business establishment without the required permission constitutes a criminal offence punishable by imprisonment of up to four years and/or a fine of up to IDR1 billion.

Government Regulation Number 56 of 2021 on the Management of Copyright Royalties for Songs and/or Music (“GR 56/2021”)

Article 3 paragraph (1)

“Any Person may commercially use songs and/or music in the form of Commercial Public Services by paying Royalties to the Creator, Copyright Holder, and/or Related Rights Holder through the National Collective Management Organization (LMKN).”

This provision confirms that individuals and business entities may use songs and/or music as part of commercial public services, such as in cafés, hotels, cinemas, or shopping centers. However, such use must be accompanied by the payment of royalties to the creators or copyright holders. Royalty payments are not made directly to individual creators but through the collective management mechanism administered by the National Collective Management Organization (“LMKN”).

Minister of Law Regulation Number 27 of 2025 concerning the Implementing Regulation of Government Regulation Number 56 of 2021 on the Management of Copyright Royalties for Songs and/or Music (“MOL Regulation 27/2025”)

Article 20 paragraph (1)

“Any Person may commercially use songs and/or music in the form of Commercial Public Services by applying for a License and paying Royalties to the Creator, Copyright Holder, or Related Rights Holder through the LMKN.”

Article 20 paragraph (4)

“The obligation to pay Royalties for the commercial use of songs and/or music in Commercial Public Services shall be the responsibility of the event organizer or the owner of the business premises.”

These provisions emphasize that any commercial use of songs and/or music must first be preceded by obtaining a license and paying royalties through the LMKN. Furthermore, responsibility for fulfilling the royalty payment obligation rests with the event organizer or business owner as the commercial user of the musical works.

Article 44

“Any Person engaging in the Commercial Use of songs and/or music in the form of Commercial Public Services may apply for a music use License through the Song and/or Music Information System integrated with the Song and/or Music Data Center.”

The process for applying for a commercial music license has now been simplified through a digital information system integrated directly with the central database.

Furthermore, Article 45 regulates the Song and/or Music Data Center managed by the Directorate General as the official database of songs and/or music registered in the Song and/or Music Information System. The database serves as the reference for the LMKN in administering royalties and may be accessed by creators, copyright holders, related rights holders, and businesses to obtain information regarding registered songs and/or music. Accordingly, businesses can ensure that their use of music is lawful, transparent, and compliant with applicable laws and regulations.

Minister of Law and Human Rights Decree Number HKI.2.OT.03.01-02 of 2016 on the Approval of Copyright and Related Rights Royalty Tariffs (“MOLHR Decree HKI.2.OT.03.01-02/2016”)

The Decree establishes the royalty tariff applicable to users making commercial use of copyrighted musical works and related rights. The tariff serves as the national benchmark for various categories of users, including cafés, restaurants, hotels, shopping centers, entertainment venues, broadcasters, and event organizers, in fulfilling their royalty payment obligations to copyright and related rights holders.

The Government has designated the LMKN as the sole official royalty collection body while standardizing royalty tariffs through this Ministerial Decree to prevent unauthorized levies. The tariffs are determined according to the scale of the business, as follows:

·      Restaurants and Cafés: Calculated annually based on the number of seats (Songwriter Royalty + Related Rights Royalty).

·      Retail Stores, Salons, Fashion Stores, and Fitness Centers: Calculated annually based on floor area (per square meter).

·      Hotels: Calculated annually based on the number of rooms.

Practical Implications

The implementation of the royalty payment obligation for the commercial use of music gives rise to the following practical consequences:

·      Obligation to Obtain an Official License: Every businesses playing music in commercial public areas must register its business with the LMKN to obtain a Commercial Music Use License Certificate.

·      No “Premium Account” Exception: Personal Spotify Premium, Apple Music, or YouTube Music accounts are licensed exclusively for personal use. Playing music from such accounts through speakers in a café or other commercial premises remains a copyright infringement.

·      Adjustment of Business Budgeting: Since royalty payments are calculated on an annual basis, businesses should include Music Royalty Expenses as part of their annual operating costs.

·      Financial and Reputational Risks: Failure to comply may expose businesses to sanctions under the Copyright Law, including substantial civil damages and reputational harm.

·      Business Reputation Risks: In addition to financial exposure arising from civil claims or criminal penalties, reports of copyright infringement may create negative public perception and damage a brand’s reputation among consumers who value fairness toward artists.

·      Legal Certainty: An official license issued through the LMKN constitutes evidence that the businesses has fulfilled its royalty payment obligations, thereby providing legal certainty and reducing the risk of disputes or legal action arising from the use of music in business operations.

Recommendations

To comply with legal obligations and mitigate risks associated with the commercial use of songs and/or music, businesses are advised to implement the following measures:

·      Conduct a Music Usage Audit: Identify all music sources used in business operations, whether originating from radio broadcasts, employees’ personal devices, or digital streaming services. Where copyrighted songs and/or music are used commercially, ensure that royalty obligations have been fulfilled or discontinue such use until the necessary license has been obtained.

·      Apply for a License through the LMKN: Businesses may apply online for a commercial music license through the system provided by the LMKN by submitting the required business information and paying royalties in accordance with the applicable invoice.

·      Switch to Royalty-Free Music Options: Where the business is still operating on a micro scale and has not allocated a royalty budget, consider using commercially licensed royalty-free music platforms, Creative Commons (CC0) licensed music, or ambient instrumental sounds.

·      Maintain Records of Royalty Compliance: All documents relating to royalty payments or music use licenses should be properly maintained and readily accessible as evidence of compliance in the event of an inspection or supervision by the competent authorities.

Closing

The use of music in cafés, restaurants, and other business premises is not merely an element to create a pleasant atmosphere but also constitutes the commercial use of copyrighted works that possess economic value and are protected by law.

Accordingly, any use of songs and/or music for commercial purposes must comply with the applicable laws and regulations, including obtaining the necessary license and fulfilling royalty payment obligations through the prescribed mechanism. Compliance with these obligations not only reduces the risk of criminal sanctions, civil claims, and reputational damage but also demonstrates a businesses’ commitment to respecting the economic rights of creators, copyright holders, and related rights holders.