Digital Shift in Royalties: India Proposes Mandatory Online Payments for Copyright Licenses

The Ministry of Commerce and Industry's Department for Promotion of Industry and Internal Trade (DPIIT) took a significant step in June 2025 by publishing the Draft Copyright (Amendment) Rules, 2025. These proposed rules aim to fundamentally transform how royalties are collected for certain creative works in India, signaling a strong move towards greater digitization and transparency.

The core of the amendment is the introduction of a new Rule 83(A). This rule proposes to make it mandatory for owners or licensors of literary works, musical works, and sound recordings to establish and maintain an exclusive online payment mechanism for collecting license fees. This applies specifically when these works are communicated to the public. Crucially, the draft explicitly states that no alternative method of payment, such as cash or cheques, will be permitted for these transactions.

This proposed shift to an exclusively online system carries several important implications for the media and entertainment industry:

1. Enhanced Transparency & Accountability: A fully digital payment trail is expected to significantly improve transparency in royalty collection and distribution. This can help reduce disputes, combat underreporting, and ensure that creators, particularly artists and musicians, receive their fair share of the revenues generated from their works.

   
   

2. Streamlined Operations: For both licensors and licensees, an online system offers greater efficiency and ease of transaction. This can simplify the administrative burden associated with licensing, leading to faster and more predictable payment cycles.

   
   

3. Modernizing the Copyright Ecosystem: By embracing mandatory online payments, India's copyright framework aligns itself more closely with the realities of the digital economy. As consumption and licensing of content increasingly occur online, the regulatory mechanisms must adapt to support this digital transformation effectively.

   
   

4. Potential Challenges: While the benefits are clear, the industry will need to assess the practical challenges, especially for smaller rights holders or licensees, in establishing and maintaining compliant online payment systems.

The draft rules were open for public feedback, with comments invited until early July 2025. If enacted, these amendments will represent a pivotal and progressive step in modernizing India's royalty collection landscape, fostering a more equitable and efficient environment for its vibrant creative industries.