The Marriage of NPREX and the Composite License: A New Era in Music Licensing
Music licensing has long been characterized by complexity—overlapping rights, fragmented governance, and opaque pricing. Broadcasters, venues, and digital platforms must navigate performance, mechanical, synchronization, and master rights, each regulated by distinct entities and fee structures.
A Market-Based Framework
The solution lies not in legal reform, but in economic design. By applying principles of mechanism design, NPREX (National Performing Rights Exchange) introduces a mechanism that determines optimal pricing for rights holders facing multiple buyers with limited budgets. This mechanism enables the creation of a master license composed of individual direct licenses, each priced through revealed preferences. The result is the Composite License—a unified contract whose value is established by a mathematical framework parameterized by key preferences revealed by the parties within NPREX’s market mechanism.
What Is the Composite License?
The Composite License consolidates performance, mechanical, synchronization, and master rights into a single legal instrument. It also accommodates releases of liability, allowing music users to secure both permission for future use and forgiveness for past unlicensed use. This streamlines transactions, reduces legal risk, and facilitates direct licensing.
The virtue of the Composite License is its structure. The Composite License is composed of individual direct licenses. The price of each direct license is a willing buyer-willing seller price, as facilitated by the NPREX price mechanism. The fee associated with the Composite License is simply the sum of the individual direct license fees that make up the Composite License. As the sum of these direct fees, the Composite License fee is itself a willing buyer-willing seller price.
The key is the mechanism - NPREX - that makes this possible.
What Is NPREX?
NPREX is a patented exchange platform designed and developed by economist and attorney Lee Greer. It uses a mathematical framework to value music licenses based on the revealed preferences of the parties rather than historical royalty data or blanket fees. Buyers and sellers engage directly, with pricing determined by market dynamics and mathematical economics.
Permission and Forgiveness
Licensing through NPREX can be settled via:
Spot transactions: Immediate permission or forgiveness for a defined usage period.
Forward contracts: Future permission or conditional forgiveness based on agreed terms.
For example, a publisher may license part of a catalogue while offering a forward contract for the remainder. This structure allows music users to avoid infringement liability by securing both usage rights and future forgiveness—bundled within the Composite License.
Why This Matters
The integration of NPREX and the Composite License resolves both legal and economic inefficiencies:
Unified licensing: All rights secured in one transaction.
Market-based pricing: Prices reflect real-time demand.
Direct relationships: No intermediaries.
Legal clarity: Reduced risk of infringement and litigation.
This represents a fundamental shift from bureaucratic licensing to transparent, efficient market exchange.
Economic Implementation
NPREX functions as both recipe and oven in the licensing process. Rights holders stratify catalogues by economic value and link them to usage types. Music users submit offers based on their needs; publishers respond with licensing and release terms. NPREX’s matching algorithm generates agreements and calculates prices for each direct license. These are bundled into a Composite License, priced as the sum of its components.
Importantly, license terms include usage share agreements—e.g., a publisher may permit usage of its catalogue for 10.57% of a music user’s total performance time. This input informs the license price, which is set before any music is used. Buyers pay upfront, ensuring rights holders and songwriters receive timely compensation.
Industry Implications
Digital Service Providers (DSPs): Streamlined licensing reduces costs and improves margins.
Broadcasters: Greater flexibility and clarity in programming.
Rights Holders: Enhanced control over pricing and access to market data.
Investors: Music rights become more transparent, liquid, and investable.
The Future of Licensing
The union of NPREX and the Composite License lays the foundation for a modern licensing infrastructure—digital, dynamic, and economically disciplined. It repositions music as both cultural expression and financial asset, and licensing as a market transaction rather than a legal formality.
In an industry where every stream and performance matters, this model offers clarity, efficiency, and fairness.