Recently, the Ministry of Commerce proposed an amendment to the Copyright Rules making it mandatory for owners or licensors of literary work, musical work, and sound recording to establish an online payment mechanism to collect license fees. SpicyIP Intern Riddhi Yogesh Bhutada writes on this proposal, analysing the implications it may have on the copyright enforcement mechanism in India. Riddhi is a final-year law student at School of Law, CHRIST (Deemed to be University), with a focused interest in Intellectual Property Law and Media and Entertainment Law. She enjoys reading and writing on how intellectual property interacts with other disciplines.
Ministry of Commerce Proposes Mandatory Online Payment of License Fees
By Riddhi Yogesh Bhutada
The Ministry of Commerce and Industry has on June 4th 2025 released a draft notification proposing amendments to the Copyright Rules, 2013. The amendment focuses on streamlining and digitising process of paying license fee of copyrighted work communicated to the public mandatorily via online medium only.
Though the provision mentions literary work, musical work and sound recording, there is no specific limitation of online payment to a particular type of work. Essentially the amendment focuses on digitising Copyright regime to align with the current digital economic atmosphere. The amendment introduces Rule 83(A) mandating an online payment system for copyright licenses. This is distinguishable from the current Rule 83 of the Copyright Rule 2013, wherein it prescribes fees payable to the Copyright Office. The main difference between both the provisions is, the existing provision focuses on prescribing fees which is given to the Copyright Office whereas the amendment focuses on fees for license which is collected by the copyright owner or licensor. Moreover Rule 83 prescribes the procedure to pay fees and mentions manner in which such fees is payable according to Second Schedule of the Act. On the other hand, Rule 83 (A) proposes collection of license fee mandatorily via online payment mechanism. The rule mandates owner or licensor of literary work, musical work and sound recording to establish and maintain exclusive online payment mechanism for collection of license fee for communication of the copyrighted work to the public.
The new rule mandates all payment of license fee exclusively through online system and no alternative method of payment is permitted. This shift to digitalisation can also be reflected in the special event held in New Delhi to commemorate 68 years of the Copyright Act, 1957 on 4th June 2025 (see here). The central theme of the event was bringing in a reform in the Copyright Act with respect to digital era. This shift is said to increase efficiency and accessibility, enabling creators from across India to secure their rights more conveniently. The mandate of online payment will make it easier to trace, audit and keep a check on royalty payment of the copyrighted work.
Traditional licensee fee or any share in form of royalty was based on informal arrangements and manually negotiated contracts especially in film and music industries wherein authors and composers remain unaware on usage of their work and are unable to keep a check on their share in form of royalty or license fee in nature of licensed work (see here and here). Digitalisation of payment will automatically save all transactions as it will be timestamped reducing the risk of non-reporting or deliberate concealment.
Digitalisation of royalty payment or license fee will, ina way, address the conflict or inefficiency in royalty collection and distribution. Digitisation of licensee fee will result in creation of record system as depositing fee in online payment mechanism will enable tracing it back to the source, ensuring that the rightful owner is the only one rewarded from the copyrighted work. The copyright enforcement mechanism in India is notorious for being opaque, where often the original creators of a work don’t end up getting their fair share of royalties. (Readers may recall this 2010 piece by Prof. Basheer on this point). Things seem to have improved after the 2012 amendment and the proposed amendment seems like another step in the right direction.
The proposed amendment will ensure each transaction being recorded making it difficult to evade responsibility. The mandatory nature of online payment will reduce delay and human intervention. As it focuses on creating more equitable system where artists and not only mere intermediaries receive their rightful contributions. By removing offline settlements, the amendment aims to reduce unreported and unpaid usage of copyrighted work. One concern that can be raised is enforcement and implementation of the online platform, as though the amendment seeks to address the lack of clarity in contracts, fragmentation of rights and inadequate digital tracking systems, without inclusive infrastructure the right holders with inadequate knowledge or no information may further be marginalised.
One prospective change through this amendment could be real time accounting wherein every time a copyright content is used in any online platform could be directly tied to an automated royalty checker based on pre-decided rates. This will essentially allow copyright owners or licensors to trace usage, assert claims and seek redressal for non-payment. Such standardisation will ensure that such work even when reused does not unaccounted. The amendment might as well enable in reducing disputes over authorship of derivative work as the standardised system could be used to keep record of every instance when the work is used as whole or in a derivate manner. This amendment looks promising in near future, as, mentioned in the 2025 Annual Report of Confederation of Societies of Authors and Composers (CISAC), the scope of generating royalty from non-digital revenue streams (offline) has reduced owing to dependence on online resources. Such dependence will make accounting for usage of copyright work in online setting much easier and convenient.
Rule 83(A) is a significant shift in policy trying to address the lack of transparency in royalty collection. Copyright societies, artists and policymakers must collaborate together to ensure mandatory online royalty framework is inclusive, transparent and enforceable. A centralized digital accounting system will ensure all stakeholders have real-time record of the transactions. However, the rule fails to outline the managing authority for online system and does not provide for dispute resolution methods or any safeguards for small creators unfamiliar with the law and digital tools. The amendment fails to acknowledge that digital literacy and internet access is not universal, which poses as a challenge for tier 3 cities and rural sectors. Illiteracy or inadequate internet access does not excuse one from recognising their inalienable royalty rights on work protected under the Copyright Act.
Though the amendment will be easier for copyright societies like IPRS which have been implementing online and digital licensing system for almost 5 years now with over 99.5% of their licensing fees collected online (paywalled), it may be difficult for certain entities to get used to such royalty collection mechanism. This digitalised system can reduce discretionary power of intermediaries but such can only be done with neutral regulatory authority which will ensure fair distribution of royalty payment. If such amendment is brought into legal realm, legal contracts prior to such amendment which do not specify digital usage rights need to be renegotiated and brought under the purview of new payment system. The efficacy of this amendment thus is conditional on inclusivity, institutional support and unbiased supervision.
At the time of posting, we’ve just noticed that Anushree Rauta has posted some pertinent questions on linkedin, regarding lack of clarity of these rules and to whom, as well as why exactly they apply. Interested readers can view her post here.
[Interested stakeholders can share their views with the Ministry on the proposed amendments by July 4th 2025 via post to Additional Secretary, Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India, Vanijya Bhawan, New Delhi110011 or by e-mail at [email protected] .]