Frequently Asked Questions

  • What is NPREX®?

    NPREX® is a marketplace for direct licensing transactions of compositions and sound recordings between rights owners, such as music publishers or music labels, and music users, such as radio stations, broadcast TV and cable TV networks, digital streaming services or general licensing establishments.

  • What is direct licensing?

    Direct licensing is the process whereby a rights owner sells a license directly to a music user. Direct performance licensing refers to the direct licensing of music performance rights. NPREX® enables direct licensing of music performance rights. NPREX® thus represents the solution to the coordination problem between music users and music owners that first gave rise to collective licensing of performance rights in the early 1900s.

    Collective licensing has been the prevailing licensing paradigm for music performance rights for the past century. A form of collective bargaining that runs afoul of federal antitrust law, this paradigm calls for a copyright holder to authorize a collective, also known as a Performing Rights Organization, to license its works. The collective then sells to a music user a single license that conveys permission to use the collection of works owned not by the collective but by the individual members of the collective.

  • Is NPREX® a Performing Rights Organization (PRO)?

    No, NPREX® is not a PRO. A PRO is a licensor of performance rights received by assignment from the rights owners. The licensee pays a license fee to the PRO, and the PRO retains an administration fee of its choosing on an ex post basis, not a pre-set percentage agreed upon between the rights holder and the PRO within the assignment of rights.

    Based upon a distribution methodology of the PRO's choosing, subject to restrictions within its consent decree, if any, the PRO conveys the balance of the license fee to some, but not all, members of the PRO.

    NPREX® is a neutral marketplace for licensing by rights owners (licensors) and music users (licensees).

    NPREX® is not a licensor or licensee and receives no assignments of any kind. NPREX® has no interest in any copyrights and has no repertoire. Rather, rights owners have catalogues that they place on NPREX® for music users to see and to license at a price agreed upon by the music user and the rights holder.

    NPREX® charges a set transaction fee, known ex ante by both buyer and seller. Like prices on a financial exchange, the price of a license through NPREX® is the price that the parties agree upon in an arm's length transaction.

    NPREX® requires no antitrust consent decree or antitrust exemption in order to implement its licensing paradigm, for, unlike any PRO or other middleman in the music licensing space, NPREX® is a market mechanism that facilitates and enables arm's length transactions between rights owners and music users.

  • How is NPREX® good for the industry?

    NPREX® solves the 100-year old coordination problem between the rights owners and music users. The centerpiece of NPREX® and the thing that makes direct licensing both efficient and ground-breaking is its price mechanism.

    The NPREX® price mechanism provides an economic solution to the problem of how to price a music license, whether performance, mechanical or synch. This solution is a mathematical framework based on advanced economic theory that maps music usage, the bargaining power of the rights owner, and the ability to pay of the music user to a price - and not just any price. Prices that emerge from this formula are willing buyer-willing seller prices that constitute an equilibrium that ensures that the rights owners make as much profit as possible under the circumstances and that the music users benefit from competition between rights owners. NPREX® is what the beleaguered and backwards music licensing industry needs - a well-organized and well-designed marketplace that enables both rights holders and music users to wield their rightful market power in a way that is welfare-enhancing for the overall industry.

  • How does NPREX® benefit the rights owners (publishers and labels) and the creators (writers and artists)?

    NPREX® is the world's one and only organized financial exchange for music licensing. Intelligent, efficient and fundamentally sound, NPREX® is a one-stop-shop for rights owners to license their songs and recordings at actual willing buyer-willing seller prices. The NPREX® marketplace offers an efficient and intelligent direct licensing mechanism that facilitates transactions between music users and rights owners according to a well-functioning price mechanism that complies with first principles of economics and both copyright and antitrust law. NPREX® gives control to the rights holder to price its license(s) in order to maximize its profit. To this end, NPREX® provides access to a pricing model that renders the profit-maximizing price a rights holder should ask of a given music user, under the circumstances, which includes the bargaining power of the rights holder, the number of other rights owners that must transact with the particular music user and their current quotes of bargaining power, and the extent of music usage by the music user. The NPREX® price mechanism enables the entire market to implement a rational price equilibrium. NPREX® also protects the rights holder from antitrust complications by removing from prices the antitrust problems associated with fractional licensing. Rights owners are thus insulated from further antitrust issues associated with fractional licenses. Finally, NPREX® provides its state-of-the-art exchange for pennies on the dollar, which at our height will save the industry hundreds of millions of dollars per year.

  • How does NPREX® benefit the music users?

    NPREX® is an efficient, one-stop-shop licensing mechanism that makes licensing simple and smart and that generates market prices. The music user will make offers to all rights owners for a license of a given usage type. For instance, the music user will make a single quote to all rights owners for a license to use their music on commercial radio. The music user will not have to make a quote for each rights holder. NPREX® implements automated licensing. Rights owners and music users that automate their licensing profiles will never even have to interface. NPREX's marketplace offers an efficient and intelligent direct licensing mechanism that offers a well-functioning price mechanism that complies with both copyright and antitrust law. NPREX® enables the music user to negotiate directly with the rights owner. This is the best way to ensure the music user gets the most for its money. NPREX® uses economic theory and advanced math to remove the externality caused by fractional licensing that causes the music user to pay too much for a combination of fractional licenses. This protects both music users and rights holders.

  • Can a publisher or label license more than one catalogue through NPREX®?

    Yes, the publisher or label may create as many different catalogues of copyrighted works or recordings as it wishes.

  • Can the publisher or label price each sub-catalogue differently?

    Yes, that is one reason for creating different catalogues.

  • How does a rights owner become a member?

    Send us a message through our contact form and we'll be happy to set you up!

  • What happens if the music user does not obtain a music license?

    If music on NPREX® is performed without permission, the music user will need to purchase forgiveness in order to avoid liability for copyright infringement. The unlicensed music user and rights owner can settle on a price for forgiveness through NPREX® within the same portal a licensed music user and rights owner will settle on a final price for the license. NPREX® thus serves as an efficient means by which a music user and music owner settle an infringement suit.

  • How does a music user become a member?

    Contact us through our contact form and we'll be happy to set you up!

  • Who may sell on NPREX®?

    Music labels, music publishers, and brokers of music labels and music publishers may sell on NPREX®. Potentially, PROs empowered by rights holders to broker direct deals on their behalf may sell on NPREX.

  • Who may buy on NPREX®?

    Digital streaming music services, terrestrial radio, satellite radio, TV, and general licensing establishments may buy on NPREX®. Brokers of digital streaming services, radio and TV stations, and general licensing establishments may also buy on NPREX®.

  • What is sold on NPREX®?

    Two contracts are sold by the rights holder through NPREX®: a license and a covenant not to sue. A music license conveys permission from a rights holder to a music user to use a specific catalogue of music. NPREX® facilitates direct licensing transactions for performance, mechanical and synchronization licenses. The performance right includes both compositions and sound recordings. A covenant not to sue conveys forgiveness for having used music without permission. A waiver of the right to sue is sold to music users who performed music without proper authorization.

  • What does NPREX® cost? Who pays NPREX®?

    NPREX® will charge a low percentage of each finalized transaction. Whereas the rights owners pay for the PROs, both music user and music owner(s) will share the cost of an NPREX® transaction. For eample, if the transaction fee is 3 percent, 1.5 percent will be paid by the licensee (music user) and 1.5 percent by the licensor (rights owner).

  • How do licensing fees from NPREX® get paid to rights owners?

    Funds will flow from the music user to NPREX® and from NPREX® to the rights owner (music publisher or label). NPREX® will pay artists or songwriters directly. NPREX® will use the Automated Clearing House (ACH) Network both to retrieve funds from the music user and to pay entitled parties.

  • How does NPREX® work?

    NPREX® enables a simple process of systematic direct licensing between rights owners and music users. The NPREX® process consists of two main steps: licensing and settlement.

    A rights holder makes an offer to enter into a license. The music user does likewise. If their offers match, NPREX® plays match-maker and joins the two in a music license, automatically, without anything further from either party. To the music user, a license conveys the right to use the catalogue. To the seller, the license conveys a promise by the buyer to pay a price consistent with the key terms of the license. Any offers not matched automatically will be reviewed by the music user on a case-by-case basis through its licensing interface. To accept these offers, the music user may either accept the offers manually through its interface or revise its outstanding offers so as to accept any and all outstanding offers that would match the revised offer made by the music user. Rights owners and music users may continuously update their offers through their respective license profiles.

    The settlement stage occurs after music has been performed. The music user and rights holder close the direct deal and money changes hands. To close a direct deal, each side must approve the final price. That is, each side indicates through NPREX® that "yes, I agree on the final price." This can occur with or without negotiation and can be automated.

    In addition to the licensing and settlement processes, NPREX® also provides buyers and sellers with a budgeting tool they can use to analyze how best to price. This budgeting tool implements the NPREX® Pricing Algorithm in delivering pricing guidance. With access to the NPREX® Pricing Algorithm, each buyer and seller can learn to price a music license. Most importantly, each buyer and seller can learn how to set up offers to license music. Specifically, each buyer and seller will learn how to choose the NPREX® Price Parameter, the single most important input to pricing in NPREX®.

  • How does pricing work on NPREX®?

    The buyer and seller of a license on NPREX® agree upon the determination of the price of the license. They may agree upon a fixed fee or a variable fee. If the agreement is for a variable fee, they will agree to use the NPREX® price mechanism to assist in the valuation of the variable license fee.

    The NPREX® price mechanism is a sophisticated formula. The formula makes the price of the license fee a function of several variables, or inputs. One of the inputs is a measure of the licensor's bargaining power, called the NPREX® Price Parameter. The NPREX® Price Parameter is bound between zero and 10, with 10 yielding the highest price. The licensee and licensor agree upon this value within the music license. Once this is done, NPREX handles the rest. The equations of the price mechanism price the license once data for the remaining variables come in, thereby automating the settlement of the license.

    So how does this all play out? The rights holder and music user agree within the music license to a value for the Price Parameter. Following execution of the music license, the music user performs music. NPREX® obtains monitoring data and passes music ownership and music performance monitoring data to the price mechanism, which refers back to the music licenses within NPREX® and pulls the appropriate Price Parameter as between a licensee and licensor. Together with the annual revenue of the licensee, these inputs map to a price that the two sides approve in order to settle the transaction. If neither side disapproves of the price within a few days, settlement is implied. NPREX® then obtains the license fee from the licensee and pays the licensor.

  • What is the role of the Price Parameter and why is it significant?

    The Price Parameter is the measure of the bargaining power of the rights holder. This measure is critical to both the licensing mechanism as well as the price mechanism.

    The license mechanism relies on the Price Parameter to be the centerpiece of a music license. The licensee and licensor come to an agreement as to the value of the Price Parameter.

    The price mechanism also relies heavily on the Price Parameter. Among the inputs to the price of a license, the Price Parameter is the key determinant of the magnitude of the price.

    The power of NPREX® lies in its licensing and price mechanisms. And at the center of each is the equations that describe the optimal license prices. These equations enable automated arm's length direct transactions between music users and rights holders at very low transactions cost - lower than the transactions costs of the PRO itself. The most fundamental parameter of the NPREX® equations is the Price Parameter.

  • Can a music publisher use NPREX® without withdrawing from its PRO?

    YES. If the PRO is ASCAP or BMI, the music publisher may enter into direct licensing deals while still a member or affiliate. The consent decrees of ASCAP and BMI prohibit each one from interfering with direct licensing. If the PRO is SESAC, GMR or another, the publisher must check its membership agreement.

  • What if a music publisher uses NPREX® but does not withdraw from its PRO?

    The PRO will constitute competition for the publisher. The publisher wishing to sell a direct license will need to quote a price for a direct license that is competitive with the prorated price of the blanket license of its PROs. The NPREX price mechanism calculates the prorated price of the PRO's blanket based on the Price Parameter agreed upon by the licensee and licensor.

  • How does a License in Effect impact direct licensing?

    A license in effect has very little effect on direct licensing. A publisher that has not withdrawn from the PRO may issue a direct license to a willing buyer. A publisher that has withdrawn from the PRO will continue to receive royalty distributions for any licenses in effect at the time of withdrawal.