The Marriage of NPREX and the Composite License: A New Era in Music Licensing
Music licensing has long been a maze of overlapping rights, conflicting interests, and opaque pricing. For broadcasters, venues, and digital platforms, securing the right to play a song often means navigating a thicket of performance, mechanical, and synchronization rights — each governed by different entities, rules, and rates.
The solution comes from a different place than the problem. The solution begins with the mathematics that flows from a well-posed problem in economic theory: what price maximizes the welfare of a rights holder under the circumstances, which consist of multiple sellers facing the same question and a buyer that needs what the sellers have and that has only so much money to spend. With the solution in hand, all that’s left to do is to build a mechanism that implements this solution in a reasonably straightforward way.
When one comes to see the blanket license as it should be - a collection of direct licenses - then the answer presents itself. A sufficiently intelligent and industrious market mechanism does the hard work. The buyer and sellers hook in, and the marketplace transfers to the buyer one master license composed of many individual licenses, each of which carries a willing buyer-willing seller price, generated by the market itself according to the revealed preferences of each like-minded buyer and seller. This master license is the Composite License. The market mechanism is NPREX. The union of NPREX — the National Performing Rights Exchange — and the Composite License offers a radically simplified, market-driven solution. Together, they promise to transform music licensing from a bureaucratic burden into a transparent, efficient transaction.
What Is the Composite License?
The Composite License is a legal innovation that bundles multiple direct licenses into a single, unified license. This works for performance, mechanical, sync as well as master rights. Instead of negotiating separately with rights organizations and mechanical rights holders, a licensee can secure all necessary rights in one go. This also works for releases of liability. That is, a music user can buy both permission and forgiveness through the NPREX Composite License.
This streamlines the process, reduces legal risk, and opens the door to direct licensing — bypassing traditional gatekeepers.
What Is NPREX?
NPREX is an exchange, designed and created over a decade ago, that values music performance licenses using a revealed preference algorithm. Built by economist and attorney Lee Greer, Ph.D., NPREX allows buyers and sellers to transact based on actual demand, not historical royalties or blanket fees.
What is Permission and Forgiveness?
Permission flows through a license, giving the music user the right to use music in the future. Settlement of a license can be made on the spot through a spot transaction, giving the licensee permission to use for a fixed period of time, starting immediately. Or, settlement of a license can be made in the future through a forward contract, giving the licensee permission to use for a fixed period of time, starting at some point in the future.
Similarly, forgiveness flows through a release of liability, giving the music user a release of liability for having used music without permission. Settlement of a release of liability can be made on the spot, releasing the music user for past usage that was not permitted. Or, settlement of a release can be made in the future through a forward contract whereby the music owner promises to forgive usage that has not yet been made without permission in exchange for a fee.
Imagine a publisher with a catalogue. Partition this catalogue into two parts. Now, imagine that the music user purchases a license for the first partition but not the second. As to the second, imagine that the publisher and the music user enter into a forward contract. Imagine further that this forward contract sets the pricing terms that will apply should the music user use any works in the second catalogue in the future. The price is not paid upfront but at the delivery of the release. The music user that obtains both the license and the forward contract for a release of liability has thus secured permission and the promise of forgiveness, which amounts to the full avoidance of infringement liability.
Now imagine that both come by way of the NPREX Composite License. This is the power of NPREX and the Composite License.
Why This Marriage Matters
The Composite License solves the legal and structural complexity of music licensing. NPREX solves the economic and transactional inefficiency. Together, they offer:
One-stop licensing: Buyers can secure all necessary rights in a single transaction.
Market-based pricing: Prices reflect real-time demand, not legacy formulas.
Direct relationships: Rights holders and licensees interact without intermediaries.
Legal clarity: The Composite License reduces the risk of infringement and litigation.
This is more than convenience. It’s a paradigm shift.
The Economics Behind the Union
Let’s talk bread. If one has a recipe for baking bread, the ingredients and an oven, then baking bread can be done reasonably well. If one has the ingredients and an oven but no recipe, then it’s possible to bake something that might be edible but might not taste right. That’s where the music licensing industry has been for a century. Today, there are ingredients (the preferences of rights holders and music users) and ovens (collective rights organizations) that bake something every so often that everyone knows just doesn’t taste quite right. NPREX is both the recipe and the oven, and the music users and music owners provide the ingredients.
What’s really happening through NPREX? Through NPREX, a publisher creates catalogues of songs stratified by economic value and links each catalogue to music usage types in a given territory. Using the music usage data of the music users, NPREX creates a list of catalogues that the music user needs to license and the extent to which it needs each catalogue. The music user then makes an offer to enter into a Composite License. The publisher makes an offer to sell a license as well as a release of liability as to a given catalogue. The matching algorithms in NPREX automate the generation of agreements, based on the revealed preferences of the parties. The price mechanism within NPREX generates a willing buyer-willing seller price for each direct license. The Composite License bundles the direct licenses together. The price of the Composite License is sum of the direct license fees. This occurs in a matter of seconds. Over a relatively short period of time, the process is repeated to make sure that the music user obtains the licenses and releases it needs. The process ends prior to the performance period. The music user pays the Composite License fee to NPREX, which allocates the total fee across the licensed catalogues and across the works within each catalogue. And all of this happens prior to the performance period.
Notice something that is critically important. The seller of a license on NPREX - the rights holder - agrees to allow the music user to use its catalogue some share of the time during the license period. For instance, through NPREX, the music user and publisher agree that the music user can perform songs from a catalogue owned by the publisher up to, say, 10.57 percent of the music user’s time spent using songs. This 10.57 percent is an input to the price of the license between them. How they come to this percent isn’t the point. That they can do so through NPREX is the key. And having done so, the price of the license is calibrated at this magnitude, allowing the price to be set on an ex ante basis.
Just so we’re clear - all this happens before the buyer has used music through this license. This means the buyer pays for the license upfront, which means rightsholders and writers get paid upfront - not 6 to 9 months after the buyer pays for the license.
All of this is made possible, indeed automated, through the equations derived by NPREX’s founder for the value of a contract for copyright clearance.
In short, NPREX treats music licenses like financial contracts — with real-time price discovery, transparent matching, and economic discipline.
Implications for the Industry
For DSPs: Streamers can license music more efficiently, reducing costs and improving margins.
For broadcasters: Stations gain flexibility and clarity in programming decisions.
For rights holders: Artists and publishers gain control over pricing and access to market data.
For investors: Music rights become more legible, liquid, and investable.
The Road Ahead
The marriage of NPREX and the Composite License can become the foundation for a new licensing infrastructure — one that’s digital, dynamic, and disciplined. It’s a model that treats music not just as art, but as an asset — and licensing not just as a legal formality, but as a market transaction.
In a world where every stream, play, and performance counts, this union offers something rare: clarity, efficiency, and fairness.