Ministry of Law and Human Rights References UK’s Single-Door Royalty System for Copyright Law Revision

The Directorate General of Intellectual Property (DJKI) under Indonesia’s Ministry of Law and Human Rights (Kemenkum) is actively referencing the United Kingdom’s unified royalty collection system as a key benchmark for the ongoing revision of Indonesia’s Copyright Law. This strategic move aims to significantly streamline and fortify the administration of royalties in the face of accelerating digital disruption, ensuring greater transparency, efficiency, and fairness for creators within the rapidly evolving creative economy.

The Impetus for Revision: Navigating Digital Disruption

Indonesia, like many nations globally, is grappling with the profound impact of digital technologies on its creative industries. The current Copyright Law (Law No. 28 of 2014) was enacted at a time when digital consumption patterns were nascent compared to today’s landscape dominated by streaming services, social media platforms, and user-generated content. This rapid transformation has exposed vulnerabilities in the existing royalty collection and distribution mechanisms, leading to challenges for both rights holders and users of copyrighted works.

Creators, from musicians and songwriters to visual artists and authors, often face difficulties in tracking the usage of their works and receiving equitable remuneration. The fragmented nature of royalty collection, with multiple collective management organizations (CMOs) operating independently, can lead to inefficiencies, administrative complexities, and a lack of transparency regarding collected funds and their eventual distribution. For businesses that utilize copyrighted music or other works commercially, navigating a multitude of licenses from various entities can be cumbersome, time-consuming, and potentially lead to compliance issues. This intricate web of regulations and collection points often results in under-collection of royalties, diminished income for creators, and an environment less conducive to innovation and investment in the creative sector.

Director General of Intellectual Property, Hermansyah Siregar, emphasized on a recent Sunday that the overarching goal of the Copyright Law revision is to make it more adaptable to digital changes while simultaneously enhancing transparency and ensuring justice for creators. "We are committed to ensuring that royalty governance in Indonesia becomes simpler, more transparent, and truly supports our creators," Siregar stated, underscoring the ministry’s dedication to fostering a more robust and equitable intellectual property ecosystem.

Current Landscape of Royalty Collection in Indonesia: Challenges and Aspirations

Indonesia’s creative economy is a significant contributor to its national GDP, employing millions and showcasing the nation’s rich cultural diversity. In 2022, the creative economy contributed approximately IDR 1,211 trillion (around USD 78 billion) to the national economy, with subsectors like music, film, and performing arts playing a crucial role. However, the potential for growth and fair compensation is often hampered by the existing framework.

Currently, several CMOs operate in Indonesia, each representing different categories of rights holders (e.g., musical works, sound recordings, literary works). While these organizations play a vital role, their independent operations can create a complex and often opaque system. Rights holders may need to register with multiple CMOs, and commercial users of music (e.g., restaurants, hotels, broadcasters, digital platforms) may have to negotiate separate licenses and pay royalties to different entities. This fragmentation leads to:

1. Administrative Burden: For both creators and users, managing multiple registrations, contracts, and payments is inefficient.
2. Lack of Transparency: Tracing the flow of royalties from users to creators can be difficult, leading to mistrust and concerns about fair distribution.
3. Under-collection: The complexity often results in lower compliance rates from users, meaning less revenue is collected overall.
4. Enforcement Challenges: Policing the usage of copyrighted material across diverse platforms and venues becomes more difficult without a unified system.
5. Digital Divide: The existing system struggles to adequately address the complexities of digital streaming, micro-licensing, and global online distribution.

The DJKI’s initiative to revise the Copyright Law is a direct response to these challenges, seeking to create a more integrated and future-proof system that can effectively manage royalties in the digital age.

The UK Model: A Blueprint for Efficiency and Transparency

To inform this critical revision, the DJKI Kemenkum embarked on an extensive study of the UK’s "single-door" royalty collection system. This involved bilateral meetings with key British organizations, specifically Phonographic Performance Limited (PPL) and Performing Rights Society (PRS) for Music, held in London. The UK model has been lauded internationally for its ability to reduce administrative burdens and simplify royalty payments for commercial music users.

The genesis of the UK’s streamlined system lies in the collaboration between PPL and PRS for Music. PPL represents record companies and performers, licensing recorded music when it is played in public or broadcast. PRS for Music represents songwriters, composers, and music publishers, licensing the public performance and broadcast of musical works. Historically, businesses playing music publicly in the UK would need two separate licenses: one from PPL and another from PRS for Music.

Recognizing the inefficiencies and complexities this posed for businesses, PPL and PRS formed a joint venture called PPL PRS Ltd, which officially launched on February 26, 2018. This entity was established to unify the process of music royalty collection through a single, comprehensive license known as The Music Licence.

Under this innovative system, businesses and organizations that use music commercially – ranging from retail stores and restaurants to gyms and offices – require only one contract and receive a single invoice from PPL PRS Ltd. This singular point of contact drastically reduces bureaucratic complexity, saving time and resources for licensees. Hermansyah Siregar highlighted that this system offers significant convenience to users without compromising the protection afforded to rights holders. This model, he noted, serves as a crucial reference for establishing a fair and transparent royalty management system in Indonesia.

Despite the operational unification, it is vital to understand that PPL and PRS for Music legally continue to manage distinct sets of rights. PPL PRS Ltd functions as a combined collector and administrator, but PPL and PRS for Music independently determine their respective tariff schemes. This legal separation ensures that there is no overlap in the rights being managed and that each original organization maintains its specific mandate. The consolidation of administrative functions, however, has led to substantial operational cost reductions, which, in turn, has resulted in an increase in net revenue distributed to rights holders. This efficient structure demonstrates that administrative simplification can directly translate into greater financial benefits for creators.

DJKI’s Engagement and Findings: A Deep Dive into Best Practices

The DJKI’s delegation engaged in detailed discussions with representatives from PPL and PRS for Music during their London visit, delving into the intricacies of their operational model, legal framework, and technological infrastructure. Key takeaways from these meetings included:

1. Operational Synergy: Understanding how PPL PRS Ltd integrates the collection processes while maintaining distinct legal ownership of rights. This hybrid approach is particularly appealing as it addresses fragmentation without necessarily requiring a complete merger of existing rights management bodies.
2. Technological Backbone: Gaining insights into the IT systems, databases, and data analytics capabilities that underpin the efficient tracking of music usage and distribution of royalties. This includes understanding how digital consumption data is ingested and processed.
3. Tariff Setting and Transparency: Examining how PPL and PRS for Music independently set their tariffs and how transparency is maintained throughout the collection and distribution lifecycle. This includes mechanisms for auditing and reporting.
4. Stakeholder Communication: Learning about the strategies employed to communicate the benefits of the single-door system to both rights holders and music users, fostering compliance and trust.

Hermansyah Siregar reiterated that the UK’s consolidated approach, which offers ease of use for licensees while maintaining robust protection for rights holders, is a significant inspiration. He emphasized that such a model is not just about administrative efficiency but about creating an ecosystem where creators are fairly compensated, encouraging further innovation and growth in the creative sector. The DJKI believes that adopting a similar framework could significantly enhance compliance rates for royalty payments and strengthen the economic rights of Indonesian creators.

Stakeholder Perspectives and Potential Impact on Indonesia

The proposed shift towards a single-door royalty collection system in Indonesia, inspired by the UK model, carries significant implications for various stakeholders:

• For Creators and Artists: The primary beneficiaries would be the creators themselves. A unified, transparent system would ideally lead to more efficient collection and more accurate, timely distribution of royalties. This could translate into higher earnings, greater financial security, and more resources to invest in their craft. It would also empower them with better data on the usage of their works.
• For Music Users and Businesses: Commercial establishments, broadcasters, digital platforms, and other entities that use music would experience a vastly simplified licensing process. Instead of negotiating with multiple CMOs, they would have a single point of contact, a single contract, and a single invoice. This would reduce administrative overhead, minimize the risk of non-compliance due to complexity, and provide greater legal certainty. This "ease of doing business" could encourage more businesses to legally license music, thereby expanding the royalty pool.
• For Existing Collective Management Organizations (CMOs): This represents a significant challenge and opportunity. Existing CMOs would need to adapt, potentially consolidating administrative functions or forming joint ventures akin to PPL PRS Ltd. While there might be initial resistance or concerns about autonomy, the long-term benefits of a more efficient and effective national collection system, which could lead to increased overall revenue, could outweigh these concerns. Collaboration, rather than competition, would be key.
• For the Government and the Economy: From the government’s perspective, a streamlined royalty system would bolster the creative economy, making it more attractive for domestic and international investment. It would enhance Indonesia’s standing in the global intellectual property landscape, demonstrating a commitment to protecting creators’ rights and fostering innovation. This could also contribute to broader economic growth and job creation within the creative sector.
• For the Public: Ultimately, a healthier and more prosperous creative industry benefits the public through a richer array of cultural products, from music and films to literature and art, all produced by creators who are fairly remunerated for their work.

Challenges and Considerations for Implementation in Indonesia

While the UK model offers a compelling blueprint, its successful implementation in Indonesia will require careful navigation of several unique challenges:

1. Legal and Regulatory Framework: Amending the existing Copyright Law will be a complex legislative process, requiring broad consensus and meticulous drafting to accommodate a new unified system. This includes defining the scope of the single entity, its legal powers, and its relationship with existing CMOs.
2. Infrastructure and Technology: Developing a robust, secure, and transparent IT infrastructure capable of managing vast amounts of data on music usage, licensing, and royalty distribution will be critical. This includes systems for identifying works, tracking usage across diverse platforms, and accurately allocating royalties.
3. Stakeholder Buy-in: Gaining the full support and cooperation of all stakeholders—creators, existing CMOs, industry associations, and commercial users—will be paramount. Extensive consultations, clear communication, and a phased implementation strategy will be necessary to build trust and address concerns.
4. Market Specifics: The Indonesian music market, with its unique cultural nuances, diverse regional genres, and varying levels of digital penetration, differs from the more mature UK market. The model will need to be adapted to suit these local specificities, ensuring inclusivity and cultural sensitivity.
5. Enforcement and Compliance: A simplified system must be coupled with effective enforcement mechanisms to deter piracy and ensure compliance. This includes educating users about their obligations and providing clear pathways for dispute resolution.
6. Governance and Transparency: Establishing clear governance structures for the single-door entity, with independent oversight and robust auditing mechanisms, will be essential to ensure transparency and accountability in royalty collection and distribution.

Timeline and Next Steps

The DJKI Kemenkum’s reference to the UK model marks a significant step in the ongoing revision of Indonesia’s Copyright Law. While a precise timeline for the complete overhaul is subject to legislative processes, the current phase involves extensive research, comparative studies, and stakeholder consultations. Following these preparatory stages, a draft revision will be formulated and presented for public input, eventually moving through parliamentary review and approval. This entire process could span several years, reflecting the complexity and importance of the proposed changes.

The Ministry anticipates that incorporating lessons from successful international models like the UK’s will enable Indonesia to craft a Copyright Law that is not only robust and fair but also future-proof, capable of supporting its dynamic creative economy for decades to come.

In conclusion, the Ministry of Law and Human Rights’ proactive stance in referencing the UK’s single-door royalty collection system underscores Indonesia’s commitment to modernizing its intellectual property framework. This initiative holds immense promise for fostering a more transparent, efficient, and equitable environment for creators and users of copyrighted works, ultimately driving the growth and sustainability of Indonesia’s vibrant creative economy in the digital age. The successful implementation of such reforms will solidify Indonesia’s position as a nation that champions creativity and intellectual property rights.