A Music Rights Exchange: What Wall Street Can Learn from NPREX
Wall Street thrives on markets. From equities to commodities, derivatives to carbon credits, the financial world is built on the principle that price discovery, liquidity, and transparency unlock value. But one of the most culturally significant asset classes — music rights — has remained stubbornly outside this framework.
Until NPREX.
Background on NPREX
NPREX is not new. It was built over a decade ago, at which time the founding team of NPREX began talking to participants in the music licensing industry about the exchange. The design of NPREX goes back even further. “Having been at BMI, I knew that the industry had no idea how to reduce the value of a performance license to math on the page. And I was pretty confident that I could do so. So I sat down at my desk at home and proved it out it to my satisfaction. It went through a few iterations. The final version became the NPREX price mechanism,” said Lee Greer, Ph.D., economist and founder of NPREX.
But the work didn’t stop there. “I knew the price mechanism was the cornerstone of a much larger structure, and I knew this structure had to be a market mechanism that automates a licensing transaction - all the way from offer and acceptance to a royalty at the song-level,” Greer said.
He knew another thing. It had to work for all types of performance licenses. The percent of revenue license fee prevails in every type of performance license, and so there had to be an explanation for that. And indeed there is. The trick is really in the implementation of the trading mechanism.
Music Licensing: The Last Frontier of Market Design
Music licensing has long been governed by blanket agreements, opaque royalty pools, and collective bargaining through performance rights organizations (PROs) like ASCAP and BMI. These structures offer convenience but sacrifice precision. There’s no real-time pricing, no direct negotiation, and no way to know what a specific license is truly worth.
NPREX changes that. It introduces:
Revealed preference pricing: Buyers and sellers input their willingness to pay, and the NPREX price mechanism finds the market-clearing price.
Direct licensing: Rights holders transact with licensees without intermediaries.
Transparent valuation: Each license reflects actual demand, not historical averages.
This is price discovery for music rights — something Wall Street understands deeply.
Intellectual Property as a Tradable Asset
Music rights are increasingly viewed as investable assets. The speculative bubble of catalog sales have largely come and gone, leaving the buyers - private equity firms, pension funds and others - with the same collective organizations historically relied on by music publishers and songwriters. They’re along for the ride and without a market infrastructure. And their assets remain illiquid and difficult to value.
NPREX provides:
Real-time pricing data
Transaction transparency
Valuation benchmarks
Liquidity potential
It’s the missing piece that turns music rights from private deals into publicly priced instruments.
The Composite License: Full Rights, One Contract
To make this market truly functional, Greer created the Composite License — a legal innovation that bundles performance and mechanical rights into a single, unified license. This simplifies transactions and reduces legal risk, making music rights more accessible to institutional buyers and platforms.
It’s the equivalent of a standardized futures contract — enabling scale, speed, and compliance.
“After we got to the point that NPREX could facilitate the settlement of hundreds of licenses in a few seconds, it was no great intuitive leap to create a single master license composed of many direct licenses - the Composite License,” Greer said. The buyer makes one offer and enters into one transaction - the Composite License, composed of many individual licenses. Like the blanket license, it’s one license. Unlike the blanket license whose price is set by the collective, thus giving rise to antitrust concerns, the Composite License carries a price equal to the sum of individual direct license fees, all of which are willing buyer-willing seller prices, thus making the price of the Composite License a willing buyer-willing seller(s) price.
The Economics Behind the Exchange
Greer’s patented price mechanism is rooted in microeconomic theory. While the underlying mathematics of NPREX’s price mechanism are not for the uninitiated, the spirit of NPREX follows from that of auction markets and financial exchanges where parties swap bids within the larger context of a industry subject to the forces of demand and supply. By applying these methods to music licensing, NPREX brings market discipline to a space that has long resisted it.
This isn’t just automation. It’s market creation — the kind Wall Street pioneered and perfected.
No disrespect to Wall Street, but it was actually the derivatives exchanges in Chicago that inspired NPREX, according to Greer. Imagine options traders entering bids into a derivatives exchange. Some are offers to buy, and others are offers to sell. The exchange Greer had in mind took the revealed preferences of the bidders and returned to them a price, generated by his price mechanism, that each side would find welfare-enhancing. This living and breathing exchange had to play both match-maker and auctioneer, automating the generation of willing buyer-willing seller prices with good economic properties.
What Wall Street Can Learn
Markets can be built anywhere — even in Nashville, even for music.
Intellectual property deserves infrastructure — not just contracts and certainly not more legal solutions.
Price transparency unlocks capital — and drives innovation.
An algorithmic marketplace that automates the generation and settlement of spot and forward contracts that convey permission to use music (and sometimes even forgiveness for having used music without permission), NPREX is not just a licensing platform. It’s an innovation in market infrastructure — one that treats intellectual property with the same rigor and discipline as stocks on NASDAQ or derivatives on CME.
NPREX is a case study in how economic theory, legal innovation, and technology can converge to create a new asset class. It’s not just a music story. It’s a market story.
“In an absolute sense, markets are good, but they’re not perfect,” said Greer, “and, relatively speaking, we’ve yet to come up with a mechanism that’s better”. He added, “it’s easy to throw theoretical stones at a theoretical glass house. It’s another thing entirely to design and build a good market.” What is a good market? According to Greer, it’s a market that has three essential properties: (1) it plays match-maker, (2) it generates well-informed and well-designed prices, and (3) it doesn’t cost much.
“I guess a fourth is that buyers and sellers adopt it,” Greer added (with a wink).