Can Music Licensing Be Done by a Market Mechanism? NPREX Says Yes.
Transforming Music Licensing into a Market-Based System
Music permeates daily life—from personal listening to commercial media—yet public performance rights have traditionally been controlled by monopolistic entities and legacy collectives. Unlike commodities or equities, music licensing remains complex and opaque.
Lee Greer, economist and founder of the National Performing Rights Exchange (NPREX), asserts that a well-designed mechanism can become a marketplace for direct music licenses for performance, mechanical, sync and even master rights. Designed over a decade ago, NPREX enables direct music licensing at scale, rivaling traditional collective models. Its second version, completed over five years ago, allows for pre-performance settlement of licenses across all performance types—radio, satellite, digital, television, streaming, and more - that gets music owners paid immediately, not months later. And through NPREX’s Composite License, music users experience the simplicity of a blanket license while engaging in direct transactions.
NPREX reconceptualizes music rights as financial contracts, applying mathematical economics within an automated bargaining platform to determine the value of a license. This marks a shift from guild-like systems to market-driven frameworks.
From Guild to Market
Historically, performance rights organizations (PROs) such as ASCAP and BMI have negotiated blanket licenses and distributed royalties via opaque formulas. NPREX replaces this collective approach with market principles—voluntary exchange, price discovery, and transparency—treating music rights as tradable economic goods.
Economic Framework: Price Mechanism and Revealed Preferences
The core of NPREX is a patented pricing algorithm that calculates license value based on:
Buyer’s revenue
Catalogue size
Catalogue bargaining power
Usage permissions granted by the publisher and agreed upon by the music user
This mechanism enables upfront pricing and payment, allowing publishers and songwriters to receive royalties before performance—an unprecedented model in the industry. The royalty-distribution function traditionally performed by a licensing collective becomes is largely accomplished through the licensing transaction. Of course, the split of licensing revenue across entitled parties - the co-owners of the underlying work itself - is a relatively simple matter once the amount of the license fee has been agreed upon. Within NPREX, the bargaining process along with the price mechanism function as a price discovery platform for music licenses.
Legal Infrastructure: The Composite License
NPREX’s Composite License consolidates multiple rights—mechanical, performance, synchronization, and master—into a single contract. This standardization reduces legal complexity and facilitates direct licensing, akin to futures contracts or ISDA agreements in financial markets. See here for more on the NPREX Composite License.
Music as a Financial Asset
NPREX introduces market infrastructure that supports:
Transparent valuation
Efficient transactions
Potential liquidity
Music rights become publicly priced instruments, accessible to platforms and creators.
Industry Implications
A market-based licensing model offers:
Artists: pricing autonomy and data access
Buyers: operational efficiency
Investors: a new asset class with predictable returns
Industry: enhanced transparency and innovation
More broadly, it reframes cultural expression as an economic entity, prompting reflection on the intersection of art and market logic.
Conclusion
NPREX affirms that music licensing can occur within a sufficiently well-designed market. By establishing the necessary infrastructure, it challenges the industry to reconsider how music rights are valued and exchanged.