Can Music Licensing Be a Market Mechanism? NPREX Says Yes.
Music is everywhere — in our headphones, our commercials, our films, our lives. Yet the rights to perform music publicly have long been governed not by markets, but by monopolies, collectives, and legacy institutions. Licensing a song isn’t like buying a stock or trading a commodity. It’s more like navigating a maze.
But what if it didn’t have to be?
“There is no question about it - a sufficiently well-designed mechanism can serve as a marketplace for transactions in direct music performance licenses,” said Lee Greer, Ph.D. economist and founder of NPREX — the National Performing Rights Exchange. “Ten or so years ago, when we built version 1.0 of NPREX, it was clear to all of us on the NPREX team - almost all of whom are BMI alums - that NPREX was game-changing. It made it possible for direct licensing to occur on the same scale as collective licensing and be just as efficient. Version 2 of NPREX built 5 years ago enables settlement of direct licensing transactions, including royalty payments, before music is used. The buyers pay upfront, and the writers and publishers receive royalties before their works are performed. And this is true for every type of performance license - radio, satellite, digital, TV, UGC, streaming and even general licensing. And the Composite License makes it feel from the music user’s perspective that it’s obtaining a blanket license. Anymore, it’s just a matter of adoption,” said Greer.
In short, NPREX treats music rights not as legal abstractions, but as financial contracts that can be valued by methods of mathematical economics. It’s a philosophical and economic shift — one that maintains that music licensing can be served by a market.
The Philosophy: From Guild to Market
Historically, music licensing has operated like a guild. Performance rights organizations (PROs) such as ASCAP and BMI negotiate blanket licenses on behalf of their members, pooling royalties and distributing them according to opaque formulas. This system prioritizes collective bargaining over individual valuation.
NPREX flips that model. It embraces the idea that value emerges from choice — that the worth of a music license is best discovered through the preferences of buyers and sellers. This is the essence of market philosophy: voluntary exchange, price discovery, and transparency.
In doing so, NPREX reimagines music rights not as entitlements, but as economic goods — subject to supply, demand, and negotiation.
The Economics: Revealed Preferences and Price Discovery
At the heart of NPREX is a patented price mechanism created by Greer. “Think of the price mechanism as a mapping from offer terms put forth by buyers and sellers to prices,” said Greer. The NPREX price mechanism has a few basic inputs: (1) the revenue of the buyer, (2) the number of songs in a given catalogue, (3) the bargaining power of the catalogue and (4) the relative extent to which the publisher allows the music user to perform its catalogue. For instance, a publisher’s offer might be the following: PUBLISHER offers to sell a license to use Catalogue 1, which consists of 1,000 songs share-adjusted, up to 10 percent of the time (that the music user spends using music). If the buyer posts similar terms such that a match results, the pricing algorithm will map inputs (1) through (4) to a price for the license.
Also recognize that this price can be calculated before music is performed by the music user. This means that the buyer pays upfront AND that the publisher and its writers can get paid up front too! This is unprecedented in the music industry.
This approach mirrors the logic of financial exchanges:
NASDAQ discovers the price of equities
CME discovers the price of a contract (future, option, swap, etc.) for commodities
NPREX discovers the price of music licenses
It’s not just automation. It’s market creation — applying economic theory to intellectual property.
The Composite License: Legal and Economic Infrastructure for a Market
To make this vision viable, NPREX offers the Composite License — a unified contract that bundles catalogues and multiple types of rights (e.g., mechanical, performance, synch, and master rights) in one licensing transaction. This simplifies transactions, reduces legal risk, and enables direct licensing without intermediaries.
It’s the legal backbone of a functioning market — akin to standardized contracts in futures trading or ISDA agreements in derivatives.
Music as an Asset Class
Music rights need market infrastructure grows. NPREX provides:
Valuation clarity
Transaction transparency
Liquidity potential
It turns music rights from private deals into publicly priced instruments — making them legible to investors, platforms, and creators alike.
The Implications
If music licensing becomes a true market:
Artists gain control over pricing and access to data
Buyers gain flexibility and efficiency
Investors gain a new asset class with predictable yield
The industry gains transparency, discipline, and innovation
But more profoundly, it means that culture itself becomes the subject of market-based transactions — that the songs we love are not just expressions, but economic entities.
This raises questions: Should art be priced like wheat or oil? Can creativity coexist with market logic? NPREX doesn’t answer these questions. It provokes them — by building the infrastructure that makes them real.
The Verdict
Can music licensing be a true market?
NPREX says yes.
And in doing so, it invites the industry — and the world — to rethink how we value music rights.