New copyright royalty proposal initiative at WIPO

Indonesia has proposed an initiative, primarily through the World Intellectual Property Organization (WIPO), to establish a new international legal framework for regulating copyright royalties, especially in the digital environment.

While the main legal instrument is being championed at WIPO, Indonesia has also engaged in regional diplomacy through forums like ASEAN to gather support and build consensus for this global push. Here is a breakdown of the proposal:

1. Core Goal

The primary objective is to address imbalances and lack of transparency in the current global copyright royalty system, particularly for phonograms (music recordings) and audiovisual works consumed on digital platforms. Indonesia argues that creators, especially from developing countries, are often excluded from equitable royalty distribution.

2. Main Channel: WIPO

The official proposal is to create a new legally binding instrument (treaty) through WIPO's Standing Committee on Copyright and Related Rights (SCCR). This initiative builds on Indonesia’s recent copyright royalty work, which are not without problems but seek to rectify longstanding local weaknesses in royalty distribution.

3. Regional Strategy: ASEAN

Indonesia is actively using its position within ASEAN and other regional forums (like the ASEAN-Japan Law Ministers Meeting and the China-ASEAN Heads of IP Offices) to:

• Secure regional support from fellow SE Asian nations.

• Advocate for the proposal in broader international discussions.

• Propose regional mechanisms, such as workshops, to discuss emerging issues like music royalties in the context of Artificial Intelligence (AI) and digital platforms. Japanese creators have recently announced similar concerns about AI ingestion and training data (see here).

4. Three Key Proposals

The Indonesian proposal has three main pillars:

• 1. Global Royalty Governance:

  • Establish a WIPO-led international framework for managing the licensing, collection, and transparent distribution of royalties for audio and visual works.

  • This aims to standardize and centralize certain aspects of royalty management to facilitate cross-border transactions and oversight.

• 2. User-Centric Distribution (UCD):

  • Promote user-based royalty payment systems as a fairer alternative to current market share models. In a UCD model, a creator is paid from the subscription fee of the individual user who actually listened to their music/content, rather than having the entire pool of money divided based on overall play counts.

  • The proposal has further flexibility, accommodating other equitable distribution models.

• 3. Strengthening Collective Management Bodies:

  • Standardize the governance, transparency, and accountability of Collective Management Organizations (CMOs) across WIPO member states through legally binding mechanisms.

  • This aims to improve the efficiency and fairness of cross-border royalty management by ensuring these organizations operate to a high, uniform standard.

Indonesia's move is diplomatic effort to create a fair, transparent, inclusive, and sustainable copyright ecosystem for emerging market creators in the digital age and positions Indonesia at the forefront of its leadership.

The proposal faces challenges. WIPO will struggle to create a legally binding mechanism. There are many copyright interests in the US and Europe that need to be considered. Many (especially developed world) CMOs are already highly sophisticated and some operate well and may resist changes. Linking it to AI training, could attract more interest and support from creators but the factors influencing AI development are not the same as those affecting emerging market creators and say streaming platforms.   Lets see how support appears for this proposal in coming months at WIPO.