LMKN: Key Player in Indonesia's Music Royalty Management

Lembaga Manajemen Kolektif Nasional ("LMKN"), or the National Collective Management Organization, plays a critical role in managing music royalties in Indonesia. Established under Law No. 28 of 2014 on Copyright, LMKN is authorized to collect and distribute royalties from the commercial use of music, ensuring fair compensation for creators, copyright holders, and related rights holders. This institution is central to the efforts of ensuring that Indonesia's music industry operates transparently and fairly when it comes to intellectual property rights.

What Is LMKN and Its Legal Framework?

LMKN is tasked with overseeing the collection of royalties for the use of copyrighted musical works in Indonesia. It operates based on laws that aim to protect the economic rights of creators, including President Joko Widodo's signing of Government Regulation ("PP") No. 56/2021, which further strengthened the framework for managing these royalties. According to this regulation, LMKN has the authority to collect royalties for music used commercially, such as in public spaces, performances, and broadcasts.

LMKN works by maintaining an integrated central database that tracks the use of songs and music across the country. The database includes vital information about the creators, copyright holders, and related rights holders. This data is crucial for the distribution of royalties, as it ensures that the creators receive fair compensation when their music is used commercially. The regulation stipulates that anyone wishing to use a song or music commercially must first obtain a license through LMKN.

How LMKN Collects and Distributes Royalties

The collection of royalties is the essential function of LMKN, which gathers payments from commercial users of music. These payments are then distributed to the rightful owners, including creators, copyright holders, and related rights holders, often through Collective Management Institutions ("LMK"s). LMKN's role also involves ensuring that these royalties are allocated fairly, according to the integrated data provided through the Song and/or Music Information System (SILM), as outlined in the government regulations.

The distribution process follows a structured method. If creators, copyright holders, or related rights holders are not identified or are not members of an LMK, their royalties are retained for up to two years. During this period, LMKN works to identify these individuals or encourage them to join an LMK. If, after two years, the royalties remain unclaimed, they may be used as reserve funds or reallocated for other purposes as necessary.

The Impact of LMKN on the Music Industry

LMKN has had a significant impact on Indonesia's music industry since its inception. The institution's efforts to increase transparency and fairness in the management of music royalties have led to notable growth in revenue. For instance, from 2016 to 2018, the amount of royalties collected by LMKN grew from IDR 22 billion to IDR 66 billion, reflecting a 300% increase over just a few years.

One of LMKN's major contributions has been the creation and maintenance of an accessible, centralized database that helps streamline royalty payments and ensures that creators are compensated for their work. The database also allows music users-such as businesses and broadcasters to easily apply for licenses to use songs and music commercially.

In addition, LMKN's role extends to resolving disputes related to royalty payments which is also one of the functions of the LMKN as stipulated in Article 5 of the Regulation of the Minister of Law and Human Rights No. 9 of 2022. The institution provides a mediation process for creators, copyright holders, and related rights holders if conflicts arise over the distribution of royalties.

Addressing Challenges in Royalty Distribution

Despite the progress, LMKN has faced challenges in managing the distribution of royalties, particularly regarding the timeliness and fairness of payments. Musicians have often voiced concerns about delays in receiving their fair share of royalties. In response to these concerns, LMKN has been working on improving its royalty management system, including the development of SILM, which aims to provide a more efficient and transparent tracking system.

In 2023, LMKN rolled out plans to further optimize its systems, ensuring that royalties are distributed more promptly and accurately. This is part of a broader effort to modernize the system and make the process of collecting and distributing royalties smoother for all involved.

LMKN's Role in Copyright Education

Beyond its work in royalty collection and distribution, LMKN plays a crucial role in educating the music community about copyright and intellectual property rights. Through outreach programs and resources, LMKN helps creators to understand how to protect their works and claim royalties. This is especially important in a rapidly changing digital landscape, where new forms of music distribution, such as streaming services, continue to transform how music is consumed and monetized.

Additionally, LMKN provides guidance to commercial music users, helping them navigate the legal aspects of using music publicly. This ensures that both creators and users of music are informed about their rights and responsibilities.

Conclusion

LMKN's role in managing music royalties is essential to the health of Indonesia's music industry. With its ongoing efforts to improve transparency, address challenges in royalty distribution, and educate both creators and commercial users of music, LMKN is contributing to a more equitable system that benefits all stakeholders. As the music industry continues to evolve, LMKN's ability to adapt to new technologies and regulatory frameworks will be key to ensuring that creators continue to receive fair compensation for their work.

Note: The content of this article does not constitute legal advice and should not be relied upon since there will be implemented regulations to be further issued. The judge's opinion may also be different, due to the facts relevant to the case. If you need specific advice related to this topic, please contact us by email at info@yangandco.com.

[1] Lmkn. (2021, December 29). LMKN Targetkan Raih Royalti Rp150 Miliar di 2022. LMKN. https://www.lmkn.id/lmkn-targetkan-raih-royalti-rp150-miliar-di-2022/