Frequently Asked Questions

  • What is NPREX®?

    NPREX® ("NPREX") is a marketplace for transactions in contracts for music copyright clearance 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. Music copyright clearance may consist of a license or a release of infringement liability. A transaction can convey to the music users permission to use music or a release of liability (“forgiveness”) for having used music without permission.

    Think of NPREX as a centralized but non-collective marketplace for music copyright clearance where rights owners and music users can negotiate directly and transact seamlessly and efficiently.

    To the extent a contract contains a music license, NPREX can be thought of as a direct licensing marketplace, but NPREX can do much more than direct licensing transactions.

  • 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, among other types of music licenses. 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 does not have a statutory exemption from federal antitrust law, this paradigm calls for a copyright holder to authorize a collective, also known as a collective 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 an independent marketplace for transactions in copyright clearance between rights owners and music users.

    NPREX is not a licensor or licensee and receives no assignments of any kind. NPREX takes 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. 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 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 individualized arm's length transactions between rights owners and music users.

  • How is NPREX good for the industry?

    NPREX is a trading platform that facilitates direct transactions between rights owners and music users in several types of contracts for music copyright clearance. As a centralized, noncollective licensing mechanism, NPREX resolves the 100-year old coordination problem between the rights owners and music users. That is, NPREX enables music users to buy all types of copyright clearance directly from the rights holders and enables rights holders to sell the same directly to music users. NPREX also gives the parties the option to use brokers within NPREX to handle transactions for them, relieving them of any administrative burden.

    The platform facilitates transactions in a host of contracts surrounding copyright clearance, including spot contracts and derivative contracts for both licenses and releases of infringement liability. The use of these contracts enhances the economic welfare of both music owners and music users.

    The NPREX price mechanism provides a sound mechanism for valuing each contract. The centerpiece of the exchange, the price mechanism provides an economic solution to the problem of how to value 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. Prices that emerge from this formula are willing buyer-willing seller prices that constitute an equilibrium that ensures the rights owners make as much profit as possible under the circumstances and 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 transact in a variety of contracts at well-designed and well-informed prices.

  • 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 execute contracts for copyright clearance as to their songs and recordings at actual market prices. The NPREX exchange offers an efficient and intelligent market mechanism that facilitates transactions between music users and rights owners according to a well-functioning price mechanism that follows from first principles of economics and that complies with 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 the extent of allowable 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 will save music owners – both rights holders and creators - hundreds of millions of dollars per year.

  • How does NPREX benefit the music users?

    NPREX is an efficient, one-stop-shop market for contracts in copyright clearance that enables music users to obtain infringement avoidance at a market price without the use of collective action by either side. Through NPREX, the music user can acquire copyright clearance in a way that mitigates infringement risk in a rational and efficient way.

    Music users may enter into contracts for both permission and forgiveness. A contract can be a spot, forward or option contract. This way, the music user may enter into a spot contract for permission that takes effect on the spot, in the future, or in the future at the music user’s option. Likewise, the music user may enter into a spot contract for a release of infringement liability that takes effect on the spot, in the future, or in the future at the option of the music user. Through the judicious use of these contracts, music users now have the key to navigating the treacherous waters of music copyrights.

    For instance, a music user may easily enter into a spot contract for permission as to a given catalogue. The music user may also enter into a forward contract for a release of liability from the same rights holder and the same license period. This way, if the music user happens to use music in some way that goes beyond what was permitted by the music license, the music user is covered by the forward contract, which has pricing terms that the music user agreed upon beforehand. By rule of NPREX, the forward contract costs nothing to enter into and covers the entire catalogue of the music user. The spot contract in permission, however, covers a subset of the rights holder’s catalogue that the music user cares more about and is willing to pay for on the spot without any music usage requirements on the part of the music user. It is the best of both worlds.

  • 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?

    A rights holder can sell and a music user can buy through NPREX permission to use music in the future as well as forgiveness for having used music without permission. There are multiple ways these conveyenace can be made through NPREX. There are spot contracts, forward contracts, and coming in 2021, option contracts. This makes six different contracts. Let us discuss each in turn.

    This is all very simple. A spot contract in permission is a music license that takes effect on the spot. A forward contract in permission is a music license that takes effect in the future. An option contract in permission is a music license that takes effect in the future at the option of the music user if the contract is a call option or at the option of the rights holder if the contract is a put option.

    A spot contract in forgiveness is a covenant not to sue, or a release, that takes effect on the spot. A forward contract in forgiveness is a release that takes effect in the future. An option contract in forgiveness is a release that takes effect in the future at the option of the music user if the contract is a call option or at the option of the rights holder if the contract is a put option.

  • 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 direct transactions in various contracts between rights owners and music users. A transaction involves both execution and settlement. For a spot transaction, execution of a license immediately gives way to settlement. For a release of liability, settlement follows execution after a period of months while the exchange gathers actual performance information. Let us summarize each workflow.

    This is the workflow for a license. The rightsholder and the music user enter offers to execute a license. If their offers match, NPREX 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. The NPREX price mechanism generates a price for the license based on the agreed upon terms within the license, including the share-adjusted count of works within the catalogue, the Allowable Performance Share, the ability to pay of the music user, and the agreed upon bargaining power of the catalogue. The music user pays the license fee to NPREX, and NPREX conveys the net fee to the entitled parties of the songs within the catalogue.

    This is the workflow for a release of liability. The rightsholder and the music user enter offers to execute a release. If their offers match, NPREX joins the two in a release of liability, automatically, without anything further from either party. The music owner conveys a covenant not to sue. Later, after music usage data become available, NPREX determines the extent to which music usage by the music user exceeded what was permissible under a license. If actual music usage exceeded the allowable music usage, then the music user buys a covenant not to sue. The NPREX price mechanism generates a price for the release of liability that depends upon the same inputs that drives the price of a license, with one exception. Instead of the Allowable Performance Share, the formula relies on the Actual Performance Share. The music user pays the release of liability to NPREX, and NPREX pays the net fee to the entitled parties of the songs used by the music user.

    A music user and rights holder may enter into forward contracts for both licenses and releases of liability. The most relevant of the two is a forward contract for a release of liability. The use case is as follows. A music user and rights holder enter into a forward contract for the future delivery by the rights holder of a release of liability. The music user pays nothing upfront. Under the terms of the forward contract, the price of the release is determined according to the NPREX Price Mechanism, calibrated according to terms agreed upon by the parties in the forward contract. The upshot is that the music user avoids infringement and pays a price for unlicensed music usage at a price agreed upon by the parties.

    In addition to the execution 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 value a contract. Most importantly, each buyer and seller can learn how to set up offers. 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.

    If the subject of the contract is permission to use music in the future, the parties agree on the music user’s Allowable Performance Share (APS), which is a relative measure (i.e., a percentage) of the extent to which the music user may use the underlying catalogue within the license period.

    Once this is done, NPREX handles the rest. The rights holder and music user agree within their contract, whether a release or a license, to a value for the Price Parameter. If the contract is a license, the parties agree upon the value of APS. If the contract is a release, the value of APS assumes the value of the share of actual performances. Together with the annual revenue of the music user, these inputs map to a price that the two sides approve.

    If the contract is a spot contract, then the agreed upon price becomes the spot price. If the contract is a forward contract, the price becomes the delivery price. If the contract is an option contract, the price becomes the exercise price. If neither side disapproves of the terms of the contract within 10 calendar days, then by rule of NPREX, the license is deemed final and binding.

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

    The NPREX Price Parameter is the measure of the bargaining power of the underlying catalogue of works covered by a contract in copyright clearance. The Parameter is bound between 0 and 10, where 10 is associated with monopoly pricing under the circumstances.

    An agreement between the buyer and seller on NPREX contains an agreed upon value of the Price Parameter. This is true whether the contract is a spot, forward or option contract for either permission or a release of infringement liability.

    The NPREX Price Mechanism receives the agreed upon value of the Price Parameter and, along with other agreed upon terms, generates a price for the contract. The significance of the Price Parameter is that it makes the price generated by the NPREX Price Mechanism an actual willing buyer-willing seller price.

  • What is the role of the Allowable Performance Share (APS) and why is it significant?

    Say that a music user and rights holder agree within a performance license that APS equals 25 percent. What does this mean? This means that the music user has permission to perform during the license period the underlying catalogue no more than 25 percent of the time.

    Why is this significant? The combination of APS and the collection of songs within a catalogue capture the amount of music usage permitted by the license. In other words, if one knows (1) the share-adjusted title count of works within a catalogue and (2) the fact that the music user may use the catalogue no more than, say, 25 percent of the time, then there is nothing further to know about permissible music usage.

    Why is it useful to have a measure of the amount of permissible music usage? Music usage is one input to the NPREX Price Mechanism, which generates a price for the spot contract. As it happens, the NPREX Price Mechanism can generate a price for the spot contract on the spot. This means that the spot contract for permission can be settled at origination of the license. In other words, the music user can pay the rights holder on the spot for the music license. This is true of a mechanical, synch or performance license. This is unprecedented.

    The upside of licensing through NPREX is the transaction can be settled immediately. The rights holder and creators can be paid immediately - as many as 9 to 12 months before the PROs pay performance royalties, if at all.

  • 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.