Indonesia's Music Royalty Crackdown Silences Cafés and Fuels Calls for Reform

A 2.2 Billion Rupiah Settlement Changes the Sound of Business

A settlement of 2.2 billion rupiah, about $135,000, for unpaid music royalties at 65 Mie Gacoan outlets has helped turn a dispute over restaurant playlists into a national debate in Indonesia. Café and restaurant operators are switching off music, musicians are questioning their payments, and lawmakers are promising changes to the copyright system.

As of August 23, 2025, the argument reaches from noodle shops and coffee counters to wedding celebrations and the Constitutional Court. At its centre is a practical question: how can Indonesia pay people fairly for their music while giving businesses clear, affordable rules for playing it?

The Mie Gacoan dispute began when the popular noodle chain's Bali franchise was reported in August 2024 for failing to pay music royalties since 2022. Warnings and unsuccessful mediation by the Indonesian Music License Center, known as SELMI, were followed by police involvement. The franchise eventually paid the outstanding royalties for its 65 outlets.

The settlement sent a warning through the hospitality industry. Owners worried about similar claims began reconsidering the background music that had long been part of their businesses. Some chose silence. Others replaced Indonesian pop, rock and independent music with foreign songs or instrumental tracks, believing those choices would avoid royalty charges.

Foreign music and instrumental recordings can also carry rights that require payment. Some operators turned instead to nature sounds or Buddhist chants, which can themselves fall under copyright protection. Changing the sound did not necessarily answer the licensing question.

For customers and employees, the immediate result was simpler: familiar songs disappeared, leaving espresso machines and clinking cups to fill the space.

What the Law Requires Businesses to Pay

Indonesia's 2014 Copyright Law provides the foundation for the royalty system. Commercial venues, from concert halls to coffee shops, must pay annual royalties for the right to play music. Enforcement remained limited for years, before the government made payments mandatory for operators of commercial public spaces in 2021 and oversight became stricter.

The National Collective Management Agency, or LMKN, collects royalties and distributes them to songwriters, performers and producers through smaller collective management bodies, known as LMK. The arrangement is intended to collect payments from music users and pass them to the people entitled to receive them.

Rates depend on factors including seating capacity, operating hours and location. Cafés and restaurants are typically charged 120,000 rupiah per seat each year, while bars and nightclubs are charged according to floor area. Micro and small businesses may qualify for lower rates, although owners say the process for negotiating those reductions is unclear.

The dispute has developed over several years:

• 2014: Indonesia passed the Copyright Law underlying the royalty system.
• 2021: The government made royalty payments mandatory for operators of commercial public spaces, followed by stricter oversight.
• August 2024: Mie Gacoan's Bali franchise was reported over royalties unpaid since 2022. Police involvement and a settlement followed warnings and unsuccessful mediation.
• March 2025: A group of 29 prominent singers filed a judicial review at the Constitutional Court seeking a clearer, more transparent system.
• Mid-August 2025: Statements about music at weddings and traditional celebrations widened public concern.

The Ministry of Law and Human Rights has reminded businesses that music played in public commercial spaces requires royalty payments even when it comes from streaming platforms such as Spotify or Apple Music. A subscription, including a business account, does not cover public performance rights.

Why a Streaming Subscription Is Not Enough

Maulana Yusran, secretary general of the Indonesian Hotel and Restaurant Association, or PHRI, said many operators mistakenly believe a digital music subscription meets their obligations. He explained that playing music to customers requires another licence:

Public performance still requires a separate license,

A subscription pays for access to a service. Public performance rights concern playing music to an audience in a commercial setting. For an owner choosing a playlist, those can feel like the same activity, but they involve different permissions.

Small establishments operating on thin margins say the system is difficult to understand as well as costly. Owners are unsure which songs are covered, what counts as a public performance and whether paying LMKN is enough. Some fear claims from individual musicians or other rights holders even after paying the agency.

Music curator Dimas Ario Adrianto has added another complication: recordings of natural sounds are phonograms and require royalties. A phonogram is a sound recording. That helps explain why replacing songs with recorded sounds may still leave an operator dealing with rights attached to a recording.

Some businesses have also tried Buddhist chants. The wider issue is that a recording can carry copyright protection even when it sounds very different from a commercial pop song. Owners seeking a simple replacement for their playlists have found that the rules extend beyond familiar hits.

Professor Ahmad Ramli, one of the drafters of the Copyright Law, has warned that excessive enforcement could alienate the public and discourage music use. Businesses want a clear answer about what they must pay and whom they must pay before deciding whether to turn the speakers back on.

Musicians Agree on Payment, but Disagree on Collection

Musicians broadly agree that creators should receive compensation when businesses use their work. Their disagreement concerns who should collect that money and how it should reach the people who earned it.

Veteran rocker Ikang Fawzi supports the existing system and has described payment as a matter of respect for creative work:

using someone's creative work should come with respect and payment.

Ahmad Dhani and Piyu favour direct licensing agreements between artists and venues, bypassing collective management organisations. Their position offers a different route from the central collection system: permission and payment would be arranged directly with artists.

Business owners, meanwhile, worry about the practical burden of obtaining individual permissions. Their uncertainty over whether an LMKN payment settles their obligations sits at the point where these competing approaches meet.

Total royalty collections have risen from 400 million rupiah, about $24,400, in the early years of the law to 200 billion rupiah, about $12.2 million, now. Those figures represent a rise of 500 times. Some musicians nevertheless report receiving as little as 60,000 rupiah, about $3.70, a year.

Ari Lasso's Payment Puts Distribution Under Scrutiny

Pop singer Ari Lasso publicly questioned a recent royalty payment of 765,000 rupiah, about $47. He argued that the amount should have been much higher given his popularity and how widely his songs are used.

Wahana Musik Indonesia, known as WAMI, responded that the payment was correct for a single month and said improvements to the system were continuing. Lasso's complaint focused attention on how payments are calculated and whether musicians can understand the amounts they receive.

The debate goes beyond the size of any one payment. Business owners want assurance that their money reaches songwriters, performers and producers. Artists want to understand how collections are divided and why their individual payments take the amounts they do.

In March 2025, 29 prominent singers filed a judicial review at the Constitutional Court, calling for a clearer and more transparent royalty system. Lawmakers have since pledged to revise the Copyright Law, centralise collection under LMKN and introduce regular audits to improve fairness.

LMKN retains 20 percent for operating costs. That makes visibility over collection, expenses and distribution a central concern for both those paying into the system and those expecting money from it.

The sharp rise in collections has increased the pressure for explanations. A larger pool of money has not ended complaints about small payments, and the disputes have strengthened demands for records that musicians and businesses can follow.

Wedding Music Brings the Argument Into Family Life

In mid-August, a nonprofit organisation suggested that music played at weddings and traditional celebrations could require royalties. The suggestion spread concern beyond restaurants and cafés to families and event organisers.

WAMI reinforced its policy that wedding organisers must pay royalties for live or recorded music used during celebrations. It set the charge at 2 percent of total music production costs. That approach uses spending on the music, rather than restaurant seating or floor area, as the basis for the fee.

Professor Ahmad Ramli offered a different explanation of the law, saying noncommercial events such as weddings are generally exempt. His warning was that excessive enforcement could harm both artists and the wider industry by turning people away from music.

For families planning celebrations, the immediate problem is uncertainty over how their event will be treated. Organisers have heard a licensing body's payment policy alongside a law drafter's explanation that noncommercial weddings generally qualify for an exemption.

Dr. Trisno Raharjo of Universitas Muhammadiyah Yogyakarta has called for a balance between creators' rights and proportionate enforcement. He explained why music used by a business is treated differently from private listening, while warning against excessive legal action:

Playing music in public spaces is fundamentally different from private consumption,

Music is used to attract consumers, so it's only natural that creators are entitled to royalties. But law enforcement must not be excessive, which will lead to the criminalization of consumers or small businesses.

What Silence Means for Customers and Workers

Gusti, a staff member at a noodle shop in South Jakarta, described the change after background music stopped. For him, the loss affected employees as well as customers:

Without background music, the atmosphere has become empty and dull,

Music not only cheers up customers but also lifts the mood of workers.

Some venues have kept sound in their dining rooms but moved away from familiar Indonesian music. A café regular in Jakarta described the difference:

The music has shifted from familiar Indonesian hits to generic background tunes, making the atmosphere dull,

Indonesia's cafés and restaurants have long provided spaces where music contributes to entertainment, identity and community. Replacing local songs with generic tracks, or removing them altogether, changes that everyday experience.

Emerging artists also depend on being heard in public venues to build an audience. Concern about losing that exposure sits alongside the demand for royalties: musicians need payment, while regular listening can help people discover their work.

Some restaurant operators see silence as the simplest response to uncertain obligations. One operator described the frustration of potentially having to seek many individual permissions:

If we must get permission from every songwriter, perhaps we should just sing songs ourselves or record random sounds.

A business that stops using music avoids the immediate task of choosing a licensed playlist. For musicians, widespread withdrawal would mean fewer opportunities for their songs to be heard and fewer businesses paying royalties for playing them.

Can Better Records Make Payments Easier to Follow?

LMKN has acknowledged concerns about transparency and is developing an integrated online licensing system while improving data collection. Work also includes efforts to integrate playlists from streaming platforms and conduct annual audits.

Playlist information matters because a royalty system needs to connect music use with the people entitled to payment. Businesses want a manageable licensing process, and musicians want records that help explain how money reaches them.

Singer Armand Maulana has suggested blockchain or similar technology as a way to bring greater transparency to royalty management. Blockchain is a shared digital record that can make transactions easier to trace. His proposal reflects the demand for a clearer view of how payments move through the system.

Neighbouring Malaysia provides a regional comparison, with a more centralised and integrated system that has proved effective in securing fair compensation for creators. In Indonesia, the proposals for central collection, better information and audits address the same practical need: making payments understandable to the people on both sides.

Technology is one part of the proposed changes. Clear rules about rates, permissions and responsibility for collection remain necessary for an owner deciding what music to play or an artist checking a payment.

Government Promises Clarity and Relief for Small Firms

Deputy Speaker Sufmi Dasco Ahmad has sought to reassure the public, saying businesses can continue playing or singing songs as before without fear of arbitrary royalty claims while the law is being revised.

The House of Representatives is working with ministries, musicians and industry representatives on changes intended to centralise royalty collection under LMKN and improve transparency through regular audits. Lawmakers are also reviewing the Copyright Law to provide greater legal certainty without placing an excessive burden on small businesses or discouraging music use.

The Ministry of Law and Human Rights has encouraged micro and small enterprises that cannot afford standard fees to negotiate with LMKN. The government is considering further reductions and has promised consultations with business associations to seek a workable balance between creator payments and business costs.

Some experts suggest music in the public domain as a temporary option while the legal framework is updated. They point to classical works or older popular songs whose copyright protection has expired. Public domain means the relevant copyright protection has ended, allowing use without permission under that protection.

No date has been given for completing the legislative revision or for a decision on the singers' judicial review. Businesses and musicians are therefore still dealing with the current system while seeking clearer rules, more understandable payments and a way to keep music in public life.

Key Points

• Mie Gacoan's Bali franchise paid 2.2 billion rupiah in outstanding music royalties for 65 outlets after a dispute involving SELMI and police.
• Indonesia's royalty system rests on the 2014 Copyright Law, with stricter enforcement following government action in 2021.
• Cafés and restaurants typically pay 120,000 rupiah per seat annually. Streaming subscriptions do not cover public performance rights.
• Total collections have risen from 400 million rupiah to 200 billion rupiah, while some musicians continue to question small payments and distribution methods.
• Twenty-nine singers sought a Constitutional Court review in March 2025. Lawmakers have promised legal changes, central collection and regular audits.
• WAMI's wedding royalty policy and Professor Ahmad Ramli's explanation of exemptions for noncommercial events have added to public uncertainty.
• The government is encouraging small businesses to negotiate fees while considering reductions and improvements to licensing and payment records.