Hospitality and Retail Sectors Push Back on Music Licensing Regulations
In response to newly enforced music royalty regulations, businesses across Indonesia—particularly in the hospitality and retail sectors—are urging the government to provide exemptions for small enterprises and background music usage that doesn’t directly generate revenue.
As reported by The Jakarta Post (2025), associations representing hotels, cafés, restaurants, and shopping centers are calling on the Ministry of Law and Human Rights to review royalty charges for non-commercial or ambience-only use of music. These stakeholders argue that the current rules may unfairly burden small business operators and could hamper the creative and service economy.
The Core of the Issue: Ambience vs. Commercial Use
Under Government Regulation (PP) No. 56/2021 and its follow-up decree from the Directorate General of Intellectual Property (DGIP), businesses are required to pay royalties for the public performance of copyrighted music—including songs played in:
- Restaurants and cafés
- Retail stores and malls
- Lobbies, elevators, and hotel rooms
Royalty payments are managed by LMKN, Indonesia’s National Collective Management Institute, which distributes fees to music rights holders. The regulation covers any use of music in commercial venues, regardless of whether the music is a main attraction or merely ambient.
However, business groups argue that background music, which is not monetized directly, should be treated differently than live performances or ticketed shows.
What Small Businesses Are Saying
According to the Indonesian Hotel and Restaurant Association (PHRI) and the Indonesian Shopping Center Association (APPBI), many small business owners are struggling with the operational costs of running a venue post-pandemic. The added burden of royalty fees—often applied uniformly regardless of business size or revenue—could be a barrier to growth.
Industry representatives have called for:
- Tiered pricing or exemptions for micro and small enterprises
- Clear guidelines on what constitutes “commercial” use
- Transparent and fair collection processes from LMKN
“Our members are not against supporting musicians or intellectual property rights. But there must be fairness in the policy’s application—especially for background music that does not generate direct income,”
said a representative from PHRI, quoted by The Jakarta Post (2025).
Potential Impact on Lifestyle Businesses
This debate is particularly relevant to Jakarta’s and Bali’s hospitality scene, where cafés, boutique hotels, and wellness studios often use music to enhance the guest experience. Without exemptions, even businesses that simply play relaxing background playlists may face royalty obligations.
For expats running small ventures or investors supporting local brands, this regulation could influence:
- Budget allocations for in-store experience
- Licensing compliance procedures
- Design decisions on whether to incorporate sound as part of ambience
It also raises broader questions about how Indonesia balances creative rights protection with business flexibility, especially in industries where margins are already tight.
Government’s Position
The DGIP has stated that royalty obligations are part of intellectual property enforcement and that they aim to ensure artists and composers are fairly compensated. However, the ministry has also acknowledged the need to listen to industry feedback and may consider revisions or technical guidelines in future.
So far, there’s no official exemption policy for ambience-only music or microbusinesses, but discussions are ongoing.
A Call for Clarity and Collaboration
The growing tensions between business owners and music rights regulators underline the importance of clear definitions and fair enforcement. While the principle of royalty collection is not being challenged, its practical application—especially for background use—needs more nuance.
As Indonesia positions itself as a hub for creative economy, tourism, and entrepreneurship, finding a middle ground will be essential.
Source:
The Jakarta Post. (2025). Businesses urge small firm, ambience exemptions in royalty charges. https://www.thejakartapost.com/business/2025/08/12/businesses-urge-small-firm-ambience-exemptions-in-royalty-charges.html
