The prolonged debate on music royalties has sparked various issues among the public. The collection of royalties by Collective Management Organizations (LMK) has been criticized as unclear, largely due to the lack of socialization with business owners. The absence of detailed classifications on which businesses are required to pay has further burdened small business operators. Equalized royalty fees without differentiation have become a key problem. Moreover, several musicians have pointed out that the royalties they receive are far from proportional to the frequency of their songs being played.
Dr. I Wayan Nuka Lantara, Head of the Management Study Program at the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), explained that Indonesia’s current unstable economy has made this royalty issue particularly impactful.
In practice, the problem not only affects large businesses but also small businesses with minimal profits, which are obliged to pay the same royalties as bigger enterprises.
“So, the little profit they already make becomes even smaller because it is allocated to pay royalties,” he said.
He added that the unstable economic conditions and declining customer numbers have made it increasingly difficult for small business operators to afford royalty payments.
As a result, restaurants and cafés with relatively small profits are now choosing not to play music at all.
Concerns over royalty charges have compelled them to take this step to sustain their businesses.
Alternatively, some have opted to play natural sounds, though even these recordings may be subject to related rights.
On the other hand, Dr. Lantara also highlighted that the collection of music royalties is intended to protect artistic works in Indonesia.
For years, many businesses have benefited from other people’s creations for commercial purposes without paying anything in return.
“The reasoning is often that they already subscribe to YouTube or Spotify. But these music platform subscriptions are actually intended for personal use,” he clarified.
Resolving this issue, he stressed, requires cooperation from both sides.
LMK, as the authority in royalty collection, must ensure greater transparency in the distribution of royalties.
In addition, socialization efforts are needed to ensure business owners understand the rules of royalty payments relevant to their operations.
Dr. Lantara further emphasized the need for a review of royalty payment policies for small businesses. He likened royalty payments to a tax system, where progressive rates apply.
“If someone earns a small income, they shouldn’t be subject to the highest tax bracket, unlike those with larger incomes,” he explained.
He added that while the current regulations are generally sound, without proper socialization, they will not be effectively implemented.
The issue also relates to transparency and accountability on the part of the authorities responsible for royalty collection.
Author: Jelita Agustine
Editor: Gusti Grehenson
Post-editor: Lintang Andwyna
Illustration: Freepik