A Music Rights Exchange: What Wall Street Can Learn from NPREX
Financial markets thrive on price discovery, liquidity, and transparency. Yet music rights—among the most culturally significant assets—have long operated outside this framework. NPREX (National Performing Rights Exchange) seeks to change that.
Origins and Vision
Founded over a decade ago, NPREX was designed to bring market discipline to music licensing. Dr. Lee Greer, economist and former BMI executive, developed its core pricing mechanism by applying mathematical economics to performance licenses. “The industry lacked a way to quantify license value,” Greer noted. “We proved it can be done.”
This mechanism became the foundation for a broader system: a market structure that automates licensing from offer to royalty payment, applicable across all music license types, not just performance. The key lies in implementing a trading mechanism that reflects the prevailing percent-of-revenue fee model.
Redefining Music Licensing
Traditional licensing relies on blanket agreements and collective bargaining through PROs like ASCAP and BMI. These systems obscure individual license value and lack real-time pricing.
NPREX introduces:
Revealed preference pricing: Buyers and sellers submit offers; the mechanism determines market-clearing prices.
Direct licensing: Transactions occur without intermediaries.
Transparent valuation: Prices reflect current demand, not historical averages.
This approach aligns music rights with first principles of economics.
Music Rights as Financial Instruments
Following a surge in catalog acquisitions, institutional investors now hold music assets without supporting infrastructure. These assets remain illiquid and difficult to value.
NPREX addresses this gap by offering:
Real-time pricing
Transparent transactions
Benchmark valuations
Liquidity potential
It transforms music rights from private agreements into tradable instruments.
The Composite License
To streamline transactions, NPREX created the Composite License—a unified contract bundling performance and mechanical rights. This legal innovation simplifies licensing, reduces risk, and facilitates institutional adoption.
Unlike blanket licenses priced by collectives, the Composite License aggregates individual direct license fees, each reflecting a willing buyer-willing seller agreement. This structure mitigates antitrust concerns and enhances pricing integrity.
Economic Foundations
NPREX’s pricing model draws from microeconomic theory and auction market design. Inspired by derivatives exchanges in Chicago, Greer envisioned a system where bids reveal preferences and generate mutually beneficial prices. The platform acts as both matchmaker and auctioneer, automating transactions with sound economic properties.
Implications for Wall Street
NPREX demonstrates that markets can be built anywhere—even for intellectual property. It offers infrastructure beyond legal contracts, enabling price transparency and capital formation.
By automating spot and forward contracts for music usage, NPREX treats intellectual property with the same rigor as equities or derivatives. It exemplifies how economics, law, and technology can converge to create a new asset class.
As Greer concludes, “A good market matches buyers and sellers, produces well-informed prices, and operates efficiently. And most importantly (wink)—it gets adopted.”