Indonesia’s Proposed Copyright Reform: What Businesses Should Know

The current Copyright Law, Law No. 28 of 2014, is widely regarded as overdue for reform. Hence why the Indonesian Government and the House of Representatives (“DPR”) are currently preparing on a new Copyright Law (“Copyright Bill”), which is expected to modernize Indonesia’s copyright framework and address a number of long-standing issues.

One of the main driving forces behind the Copyright Bill is the increasing scrutiny surrounding the payment of royalties for the public performance of songs (“Performing Rights Royalties”) in Indonesia. In recent years, disputes relating to the non-payment of Performing Rights Royalties have become increasingly visible, accompanied by broader concerns regarding the transparency and governance of the existing blanket licensing system administered through collective management organizations. These developments have, in turn, encouraged several prominent Indonesian musicians to adopt direct licensing arrangements in lieu of relying solely on the collective licensing framework.

That said, the Copyright Bill extends beyond the issue of music royalties. It also seeks to address several broader copyright-related developments and challenges, including the following:

Blanket Licensing for Performing Rights

The Copyright Bill generally retains the existing blanket licensing system for Performing Rights Royalties, but introduces several key changes. Most notably, the role of collecting and distributing royalties, which is currently carried out by the National Collective Management Organization (Lembaga Manajemen Kolektif Nasional / “LMKN”), would instead be handled directly by the Collective Management Organizations (Lembaga Manajemen Kolektif / “LMK”). The Bill also proposes the establishment of the National Collective Management Commission (Komisi Manajemen Kolektif Nasional / “KMKN”), which would supervise LMKs and determine royalty tariffs and calculation methods.

As a result, users would enter into licensing arrangements directly with the relevant LMKs rather than the LMKN. This may particularly affect sectors where royalty tariffs are not yet standardized and licensing terms still depend heavily on negotiations. Existing arrangements with the LMKN may also eventually be transferred to the LMK, although the implementation details remain unclear at this stage.

Ownership of AI-Generated Works

Another significant development under the Copyright Bill concerns the treatment of artificial intelligence (“AI”)-generated works. The Copyright Bill proposes expanding the definition of “work” and “author” to include creations produced with the assistance of AI. Importantly, however, copyright protection would only be available where sufficient human involvement can be demonstrated, such as human creative conception, documented creative processes, and human aesthetic judgment.

The Copyright Bill also proposes transparency obligations for AI-generated works and prohibits certain practices, such as unauthorized imitation of a creator’s distinctive style, infringements of moral rights, and the misrepresentation of authorship or identity through AI-generated materials.

Use of Copyrighted Works for AI Training Models

The Copyright Bill also addresses the increasingly contentious issue of using copyrighted materials to train AI models. Under the proposed framework, copyrighted works may be used as training materials, provided that such use falls within the scope of “fair use” or is conducted pursuant to a valid license in accordance with applicable laws and regulations. As a result, entities involved in AI model training, particularly those relying on publicly available content, may no longer be able to freely use such materials without considering copyright implications and potential licensing requirements.

Unlike the current Copyright Law, the Copyright Bill expressly recognizes the concept of “fair use”, allowing certain uses of copyrighted works without prior authorization from the copyright holder, particularly for purposes such as education, research, criticism, news reporting, parody, and other non-commercial activities, provided that such use does not unreasonably harm the interests of the copyright holder.

While the inclusion of a statutory fair use concept represents a notable step forward, the Bill still leaves several important questions unanswered. In particular, further guidance may be required to clarify the practical boundaries of “non-commercial” use, especially in circumstances where commercial and non-commercial elements may overlap in practice.

Landlord Liability for Digital Platforms

The Copyright Bill marks a transition for digital platforms and marketplace operators from a reactive safe-harbour model to a more active oversight role. Under this new framework, platforms are expected to implement preventive measures through detection, reporting, and prompt takedown systems to curb the distribution of infringing content. Additionally, operators will need to integrate their services with official copyright management networks and commercial-use monitoring systems. 

While the technical details await future implementing regulations, these changes would require a more structured compliance approach to mitigate the risk of administrative sanctions – which introduced by the Copyright Bill. These administrative sanctions include written warnings and temporary suspension of activities to blocking access to corporate administrative systems, closure of business premises and/or digital platforms, revocation or cancellation of business licences, and administrative fines.

Current Legislative Progress

The Copyright Bill is designated as a priority initiative under the National Legislation Program. The legislative process recently advanced in early May with the convening of official public review (uji publik) session hosted by the Ministry of Law, aimed at gathering crucial feedback from industry stakeholders and legal experts on key provisions. 

Further, government officials have stated a clear commitment to finalize and pass the Bill into law within this year. While the draft is still undergoing final deliberations between the Government and the DPR, this targeted timeline signals that legislative momentum is building, making it essential for businesses to closely monitor subsequent updates. (DNK/ADR/RAK)