How To Calculate Song Royalties Based On Places Of Business So As Not To Pay Wrongly

How to calculate song royalties based on a place of business (freepic)

YOGYAKARTA - How to calculate song royalties based on business premises is now the concern of many business people in Indonesia. After the issue of viral music royalties, many cafe owners, restaurants, and shopping centers are confused about the costs to be paid.

This issue is busy because of a new regulation that requires every place of business to pay royalties if playing songs for commercial purposes. So that there are no wrong steps, it is important to understand the tariff provisions and applicable calculation methods.

Reporting from the Antaranews page, the Chairperson of the National Collective Management Institute (LMKN), Dharma Oratmangun, emphasized that any use of recordings for commercial purposes in business spaces (starting from music, natural voices, to audio effects) must still be accompanied by royalty payments to eligible parties.

The regulation is emphasized in Law Number 28 of 2014 and strengthened through Government Regulation Number 56 of 2021 concerning Management of Song and/or Music Royalties.

Interestingly, the amount of royalty rates has actually been officially determined by the government. For the culinary services sector, this provision is contained in the Decree of the Minister of Law and Human Rights Number HKI.02/2016.

The rate of royalties itself is divided into two categories, namely copyright intended for songwriters, and related rights which are the rights of record producers and performers.

For details, restaurants and cafes will be charged IDR 60,000 per seat per year for each right. Meanwhile, pubs, bars, and bistro are required to pay IDR 180,000 per square meter per year, and for discotheques and nightclubs the fare reaches IDR 250,000 for copyright and IDR 180,000 for related rights.

All payments for music royalties can be made at least once a year and are now more practical because of the availability of online services through the official LMKN website (imkn.id).

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Based on the rules for paying song copyright royalties described by LMKN, we present the following simulations. The following is a simulation with an illustration of a small cafe with 15 seats, a bar with an area of 100 square meters, and discotheques:

For cafe businesses with a capacity of 15 seats, owners are required to pay royalties of IDR 60,000 per seat per year for copyright and IDR 60,000 per seat per year for related rights. That way, the total royalty obligations reach IDR 1,800,000 per year.

Then if the business that is run is in the form of a bar with an area of 100 square meters, then the calculation is carried out based on a tariff of Rp. 180,000 per square meter per year. This amount applies to copyright and related rights, so that the total royalties that must be paid reach Rp. 36,000,000 per year.

Meanwhile, for discotheques or nightclubs, tariffs are set at IDR 250,000 per square meter per year for copyright and IDR 180,000 per square meter per year for related rights. This means that, with an area of 100 square meters, the total royalty obligation reaches IDR 43,000,000 per year. If the area is greater, for example, 200 square meters, then the costs to be incurred will increase to IDR 86,000,000 per year.

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