NPREX® Rules of the Exchange

As a Participant in NPREX’s electronic marketplace for direct licensing transactions in the music licensing industry (the “Exchange”), and as agreed upon by your execution of the NPREX® End User License Agreement, you acknowledge and agree to adhere to the following Rules of the Exchange as a condition of your use of the Exchange:

  • 1.Definitions

    • (a) Agreeable Price Range - the range of prices determined by processes used by NPREX® to compute the price of a contract based in part on some combination of one or more non-null Price Parameter(s), a Price Floor, and a Price Cap
    • (b) Allowable Usage Share - This is the maximum share of total usage, herein understood to be, as the case may be, either total performances, total synchronizations or total reproductions, copies or distributions, of works within any and all catalogues whose particular usage is licensed by the Licensee through NPREX during the License Period.
    • (c) Ask Price - the price that a Seller is willing to accept for a contract
    • (d) Benchmark Price - the pro-rata price that the music user would pay for music usage according to custom or convention 
    • (e) Bid Price - the price that a Buyer is willing to pay for a contract
    • (f) Buyer - a Participant, or an agent thereof, seeking to purchase one or more contracts on the Exchange, having the full right, power and authority to enter into and perform its obligations under this Agreement and promising that it shall at all times provide all cooperation and assistance as may reasonably be requested by NPREX to enable the parties to exercise their rights and perform their obligations under and in connection with an agreement executed through NPREX
    • (f) Cancellation Period - the period of time during which a Participant may cancel a contract on NPREX
    • (g) Catalogue - a collection of works that a Seller has at least a fraction of the right to transact
    • (h) Catalogue Identifier - an identifier of a catalogue on NPREX
    • (i) Catalogue Type - the type(s) of music usage a catalogue has been made available by its seller through NPREX
    • (j) Contract Period - the period of time during which a contract is effective
    • (k) Delivery Date - the date of performance of a forward contract
    • (l) Delivery Price - the price paid on the date of performance of a forward contract
    • (m) Final Agreed Upon Price - the fee agreed upon by the Buyer and Seller of a contract
    • (n) License - the right to use works in a catalogue for a given time-period
    • (o) License Period - the period of time during which the license is effective
    • (p) Music Performance Data - an electronic record of music performances that contains detailed information on each music performance, including but not limited to the name of the artist, the name of the recording, the identity of the music user, and the surrounding circumstances, including the time of and date of performance(s)
    • (q) Music Usage Type - the type of broadcast by which works within a catalogue are performed
    • (r) Participant - a Buyer or Seller that is registered on the Exchange
    • (s) Price Bounds - A range of prices containing a Price Floor, which may be zero, and a Price Cap, if one
    • (t) Price Cap - the maximum price for a contract
    • (u) Price Floor - the minimum price for a contract
    • (v) Price Parameter - the measure on a scale of 0 to 10 of bargaining power exercised by a Seller on the Exchange, with 10 being the highest
    • (w) Right Type - the type of license, i.e., performance, synch, mechanical
    • (x) Seller - a Participant, or an agent thereof, seeking to sell a contract on the Exchange, having the full right, power and authority to enter into and perform its obligations and grant the rights, licenses, consents and authorizations required under an agreement on NPREX, stipulating that the execution of an agreement by its Representative whose signature is set forth in any agreements through NPREX has been duly authorized by all necessary corporate or organizational action of such party, and promising that it shall at all times provide all cooperation and assistance as may reasonably be requested by NPREX to enable the parties to exercise their rights and perform their obligations under and in connection with an agreement executed through NPREX
    • (y) Settlement - the reconciliation by the party to an NPREX® music license of its duty under the terms of the license
    • (z) Work - A song or recording thereof

  • 2. Accuracy of Data

    • 2.1 Standard of Accuracy - Best Efforts and Knowledge

      • (a) Any data or catalogues posted by a Seller on the Exchange must be true and accurate according to the best efforts and knowledge of the Seller.
      • (b) Seller warrants that it has a fractional right to license the works in the catalogues posted on the Exchange.
        • (1) The seller on NPREX® of a performance license must have the right to license the performance of each work within the catalogue in the license period.
        • (2) The seller on NPREX® of a synchronization license must have the right to license the synchronization of each work within the catalogue in the license period.
        • (3) The seller on NPREX® of a mechanical license must have the right to license the reproduction or distribution of each work within the catalogue in the license period.
        • (4) The seller on NPREX® of a custom arrangement license must have the right to license the arrangement of each work within the catalogue in the license period, notwithstanding the right of the composer or writer to approve of the arrangement.
        • (5) The seller on NPREX® of a grand rights license must have the right to license the dramatic performance of each work within the catalogue in the license period.
      • (c) Any data submitted to the Exchange by a Buyer must be true and accurate according to the best efforts and knowledge of the Buyer.

    • 2.2 Procedures for Mitigating Effects of Inaccurate Data

      • (a) Dispute between Participant and Non-Participant. Credible evidence of a dispute between a Participant of the Exchange and a non-Participant of the Exchange in the ownership or collection share of a work on the Exchange may result in a suspension of the licensability of the disputed share of that work.
      • (b) Dispute between Participants.  Credible evidence of a dispute between two or more Participants on the Exchange in the ownership or collection share of a work on the Exchange will not result in a suspension of the licensability of the disputed share of that work.
        • (1) Sellers on the Exchange will resolve disputes as to ownership or collection shares of any works on the Exchange.
        • (2) NPREX will use reasonable efforts to continue to distribute license fees for works with disputed ownership or collection shares to Sellers and its writers according to the music ownership data submitted by the Sellers to NPREX through normal NPREX processes.
      • (c) Illogical Ownership or Collection Shares. Credible evidence that the cumulative share of ownership or collection of a work exceeds 100 percent in a given territory may result in a suspension of the licensability of the disputed share of that work.
      • (d) Renewal of Licensability of Previously Disputed Shares. Following a suspension of the licensability of the disputed share of a work, receipt by NPREX of written evidence, sent by all relevant parties, of a final resolution of the dispute will result in the immediate renewal of licensability of the share(s) of the work.
      • (e) Disclaimer. An undertaking by NPREX to ensure a threshold level of logical consistency among music ownership data confers upon NPREX no responsibility or liability associated with faulty music ownership data.

  • 3. Licensing

    • 3.1 Eligibility for Creating an Offer

      • (a) Only a Participant may create an offer to enter into a License on the Exchange.
      • (b) A Participant must establish the Essential Elements of an Offer in order to create an offer to enter into a License.

    • 3.2 Essential Elements of an Offer to Enter into a License

      • The essential elements of an offer to enter into a music license on the Exchange consist of:
      • (a) License Period,
      • (b) Music Usage Type,
      • (c) Catalogue Identifier (An offer from a Buyer who is a participant on the Exchange need not include a Catalogue Identifier),
      • (d) Right Type, and
      • (e) Pricing Terms.
        • (1) Pricing Terms must consist, at a minimum, of either a Price Parameter or a combination of a Price Floor and a Price Cap.
          • (a) If no Price Floor is entered, the Price Floor is zero.
          • (b) If no Price Cap is entered, there is no Price Cap.
        • (2) Price Parameters consist of a Price Parameter floor and a Price Parameter cap.
          • (a) A single Price Parameter is sufficient to satisfy this requirement even if no Price Cap or Price Floor is included by the Participant.
          • (b) A Price Parameter Cap equal to 9.9999999 indicates that the party wishes to quote a price equal to some multiple of the benchmark price.
          • (c) Where Parameter Cap equals 9.9999999, the Parameter Floor serves as a multiple (“Factor”) of the price of the licenses sold by the performance rights organizations in the United States (hereinafter referred to as “PROs”) to the Music User.  Hereafter, the price of the licenses sold by the PROs will be referred to as the “Total PRO Fees”. 
          • (d) Example:  For instance, assume that the amount of the Total PRO Fees equals $1.00.  For purposes of this example, also assume that the share of total performances, whether actual or allowable, made by the Music User accounted for by the works in the Catalogue (“Share”) is 10 percent.  If the parties agree that the Factor equals 0.95, then the Music User and Copyright Holder agree that the Final Agreed Upon Price will be given by: Factor x Share x Total PRO Fee = 0.95 x 0.10 x $1.00 = $0.095.
      • (f) Activation
        • (1) Only an active offer can be accepted by a counter-party.
        • (2) An offer by a Seller is not active upon submission. It must be activated by the Seller before it can be accepted by a Buyer.
        • (3) An offer by a Buyer is active upon submission.

    • 3.3 License transferability

      • (a) A License entered into on the Exchange is non-transferable insofar as a Participant who entered into a fully executed License cannot enter into an opposite transaction through NPREX with respect to the same License.
        • (1) A Buyer of an executed License cannot resell the License on NPREX.
        • (2) A Seller of an executed License cannot repurchase the License on NPREX.
      • (b) This Agreement shall bind the parties and their respective successors and assigns.

    • 3.4 Execution of a License

      • (a) A License is fully executed on the Exchange if
        • (1) Both Participants sign the License before the end of the Cancellation Period, or
        • (2) Neither Participant cancels the License during the Cancellation Period.
      • (b) The Cancellation Period is the shorter of the period between the time of the creation of the agreement and midnight Coordinated Universal Time (Greenwich Mean Time) on the start date of the License Period or
        • ten (10) calendar days following the creation of an agreement.
      •  

    • 3.5 Buyer Rights

      • The Buyer of a fully executed License has the right to use the Catalogue that is the subject of the License according to the terms of the License.

    • 3.6 Seller Rights

      • The Seller of a fully executed License has the right to receive payment pursuant to the terms of the License.

    • 3.7 Buyer Obligations

      • The Buyer of a fully executed License must pay the license fee in accordance with the terms of the License.

    • 3.8 Seller Obligations

      • The Seller of a fully executed License must convey to the Buyer the right to use the Catalogue in accordance with the terms of the License.

  • 4.Settlement of License

    • 4.1 Eligibility to Settle a License

      • Only a Participant of the Exchange may settle a License on the Exchange.

    • 4.2 Essential Elements of a Settlement of a License

      • Settlement of an executed License requires the approval of both the Buyer and Seller of the Final Agreed Upon Price of the License.  Approval requires assent to the Final Agreed Upon Price by both Buyer and Seller.
        • (a) The Buyer assents when it either enters or agrees to the entry of a Bid Price that equals the related Ask Price.
        • (b) The Seller assents when it either enters or agrees to the entry of an Ask Price that equals the related Bid Price.
        • (c) The Buyer and Seller assent to the Final Price when they agree to a license that contains either a single Price Parameter or a combination of Price Parameters that describes a willingness for the Final Price to be a multiple of a benchmark price.

    • 4.3 Time-Period for Challenging the Final Agreed Upon Price

      • Subject to the rules within this section, a Participant may challenge the Final Agreed Upon Price for which assent was given in accordance with section 4.2.
        • (a) Variable Price with Single Price Parameter. The parties have ten (10) calendar days following notice from NPREX to Challenge the Final Agreed Upon Price where the License includes one Price Parameter, with or without Price Bounds.
        • (b) Fixed Price with Price Bounds. The parties cannot Challenge the Final Agreed Upon Price where the License includes Price Bounds but does not include at least one Price Parameter.
        • (c) Fixed Price. The parties cannot Challenge the Final Agreed Upon Price where the License includes a non-zero Price Cap and a non-zero Price Floor that share the same value.

    • 4.4 Disputed Settlement

      • A settlement is disputed when the Buyer and Seller have agreed upon an Agreeable Price Range but cannot agree upon a price within the Agreeable Price Range. The Buyer will pay to NPREX the upper bound of the Agreeable Price Range and the Seller will receive from NPREX the lower bound of the Agreeable Price Range where:
        • (a) the License includes a blank, or null, Price Parameter Cap and a blank, or null, Price Parameter Floor,
        • (b) the Pricing Terms within the license include a positive Price Floor, and the Price Floor is not equal to the Price Cap, and
        • (c) fifteen (15) calendar days have passed since notice of an unsettled transaction was conveyed by NPREX to the Buyer and Seller.

  • 5. Royalty Distribution

    • 5.1 Duty to Pay

      • NPREX will distribute to entitled parties the proceeds of licensing transactions on a timely basis.
        • (a) An entitled party is a rights holder or its designee, a writer, or an artist whose collection or ownership share is payable through NPREX.
          • (1) A collection or ownership share is payable on NPREX if the Seller of the license affirmatively informs NPREX, prior to the beginning of the License Period, of the ownership or collection share for inclusion in the licensing transaction.
        • (b) For a performance license, NPREX will make reasonable efforts to distribute on a quarterly basis. For a synchronization license, NPREX will make reasonable efforts to distribute on a periodic basis, as a synch license is executed. For a mechanical license, NPREX will make reasonable efforts to distribute on a quarterly basis. For all other types of licenses for compositions, NPREX will make reasonable efforts to distribute on a timely basis.

    • 5.2 Payment Methodology

      • NPREX will employ a royalty payment distribution methodology for the payment of licensing proceeds, less the NPREX transaction fee, hereafter referred to as the “NPREX Payment”. The methodology for creating the NPREX Payment depends on the availability of a record of music usage that NPREX, in its discretion, deems reliable, which hereafter is regarded as a “Qualified Record of Music Usage.”
        • (a) Where a Qualified Record of Music Usage is available such that the data cover the licensee or, if no license was executed, the music user for the entire license period, NPREX will render the NPREX Payment to each work according to the share of music usage accounted for by each work, whether in terms of duration or count, and in light of the amount of ownership of or the right to collect for the work represented by the Seller of the license.
        • (b) Where a Qualified Record of Music Usage is available such that the data cover a portion of the license period, NPREX will use best efforts to render the NPREX Payment to each work according to the share of music usage accounted for by each work, whether in terms of duration or count, and in light of the amount of ownership of each work represented by the Seller of the license.
        • (c) Where a Qualified Record of Music Usage is unavailable, NPREX will pay each work in a catalogue equally in light of the amount of ownership of each work represented by the Seller of the license.
        • (d) An entitled participant who is payable through NPREX receives its pro-rata share, according to ownership or collection percentage, of the payment to a work.

  • 6. Delivery of Music Performance Data

    • 6.1 Radio

      • Where the Buyer is a radio station, satellite radio group or parent company of either a radio station or a satellite radio group, the Buyer shall use best efforts to deliver Music Performance Data on a timely basis to NPREX.

    • 6.2 TV

      • Where the Buyer is a TV station, a TV network or a parent company thereof, the Buyer has no obligation to deliver to NPREX Music Performance Data showing music performances by the TV station or TV network.

    • 6.3 Digital and Other Streaming Services

      • Where the Buyer is a digital music user, including a streaming service or podcaster, the Buyer shall use best efforts to deliver Music Performance Data on a timely basis to NPREX.

    • 6.4 General Licensing

      • Where the Buyer is an establishment such as a bar, restaurant, office building, hotel, hospital, concert venue or any business establishment that performs music for its clientele, the Buyer has no obligation to deliver to NPREX Music Performance Data, unless readily available.

    • 6.5 Timely Basis of Delivery

      • Music Performance Data are timely delivered to NPREX if NPREX receives, in a manner defined by NPREX, from the Buyer Music Performance Data within thirty (30) calendar days of the end of the month during which such music was performed or otherwise used by the Buyer.

  • 7. Regulation of the Exchange

    • 7.1 NPREX Right to Cancel Licenses

      • NPREX reserves the right to cancel a License that, in the discretion of NPREX, clearly reflects a mistake by a Participant.

  • 8. Infringement Settlement and Release Process

    • The mission of NPREX is to enable broad-based direct licensing transactions between music owners and music users. Although a music user on NPREX may easily obtain a license to each catalogue on NPREX, not every music user will take advantage of this. Copyright infringement may still occur. Therefore, a music user needs a way to mitigate the risk of copyright infringement, and a music owner needs an efficient way to obtain fair compensation for the unauthorized usage of its music. To this end, NPREX enables seamless transactions that settle and release copyright infringement claims. Participants on NPREX agree to pursue good-faith, arms-length settlement transactions within a 120-day period following notice from NPREX.  A Seller on NPREX agrees not to file a copyright infringement suit for a 120-day period following notice from NPREX of the need to settle unauthorized usage of its works. This provides a fair, safe and meaningful settlement procedure for both music users and music owners.

    • 8.1 Rule Against Infringement Suits between Participants on NPREX

      • No Seller or its affiliate may file a complaint in any court in the United States for copyright infringement against a Buyer or its affiliate unless a settlement through NPREX has failed as defined in Rule 8.3.

    • 8.2 Notice of Settlement Transaction

      • Upon obtaining credible evidence of an unlicensed use of music, NPREX shall send notice to both Buyer and Seller that a transaction through NPREX in a covenant not to sue is pending between the Buyer and Seller.

    • 8.3 Failure of a Settlement and Release

      • A transaction on NPREX in settlement and release of an infringement claim fails upon the satisfaction, whether contemporaneous or not, of any of the following conditions.
        • (a) More than 120 calendar days have lapsed since the original notice of a Settlement Transaction was sent by NPREX to the Buyer and Seller,
        • (b) The Buyer fails to remain a Participant of the Exchange during the 120-day period.

    • 8.4 NPREX Efforts to Facilitate Transaction 

      • NPREX may recommend a price for a Settlement Transaction.

  • 9. Forward Contract

    • 9.1 Eligibility for Creating an Offer

      • (a) Only a Participant may create an offer to enter into a forward contract on the Exchange.
      • (b) A Participant must establish the Essential Elements of an Offer in order to create an offer to enter into a forward contract.

    • 9.2 Essential Elements of an Offer to Enter into a Forward Contract

      • The essential elements of an offer to enter into a forward contract on the Exchange consist of:
      • (a) Contract Period,
      • (b) Music Usage Type,
      • (c) Catalogue Identifier (An offer from a Buyer who is a participant on the Exchange need not include a Catalogue Identifier),
      • (d) Right Type, and
      • (e) Pricing Terms.
        • (1) Pricing Terms must consist, at a minimum, of either a Price Parameter or a combination of a Price Floor and a Price Cap.
          • (a) If no Price Floor is entered, the Price Floor is zero.
          • (b) If no Price Cap is entered, there is no Price Cap.
        • (2) Price Parameters consist of a Price Parameter floor and a Price Parameter cap.
          • (a) A single Price Parameter is sufficient to satisfy this requirement even if no Price Cap or Price Floor is included by the Participant.
          • (b) A Price Parameter Cap equal to 9.9999999 indicates that the party wishes to quote a price equal to some multiple of the benchmark price.
          • (c) Where Parameter Cap equals 9.9999999, the Parameter Floor serves as a multiple (“Factor”) of the price of the licenses sold by the performance rights organizations in the United States (hereinafter referred to as “PROs”) to the Music User.  Hereafter, the price of forward contracts sold by the PROs will be referred to as the “Total PRO Fees”. 
          • (d) Example:  For instance, assume that the amount of the Total PRO Fees equals $1.00.  For purposes of this example, also assume that the share of total performances, whether actual or allowable, made by the Music User accounted for by the works in the Catalogue (“Share”) is 10 percent.  If the parties agree that the Factor equals 0.95, then the Music User and Copyright Holder agree that the Final Agreed Upon Price will be given by: Factor x Share x Total PRO Fee = 0.95 x 0.10 x $1.00 = $0.095.
      • (f) Activation
        • (1) Only an active offer can be accepted by a counter-party.
        • (2) An offer by a Seller is not active upon submission. It must be activated by the Seller before it can be accepted by a Buyer.
        • (3) An offer by a Buyer is active upon submission.

    • 9.3 Forward Contract Transferability

      • (a) A forward contract entered into on the Exchange is non-transferable insofar as a Participant who entered into a fully executed forward contract cannot enter into an opposite transaction through NPREX with respect to the same forward contract.
        • (1) A Buyer of an executed forward contract cannot resell the forward contract on NPREX.
        • (2) A Seller of an executed forward contract cannot repurchase the forward contract on NPREX.
      • (b) This Agreement shall bind the parties and their respective successors and assigns.

    • 9.4 Execution of a Forward Contract

      • (a) A forward contract is fully executed on the Exchange if
        • (1) Both Participants sign the forward contract before the end of the Cancellation Period, or
        • (2) Neither Participant cancels the forward contract during the Cancellation Period.
      • (b) The Cancellation Period is the shorter of the period between the time of the creation of the agreement and midnight Coordinated Universal Time (Greenwich Mean Time) on the start date of the Contract Period or
        • ten (10) calendar days following the creation of an agreement.
      •  

    • 9.5 Buyer Rights

      • The Buyer of a fully executed forward has the right to buy a covenant not to sue that is the subject of the forward contract according to the terms of the forward contract.

    • 9.6 Seller Rights

      • The Seller of a fully executed forward contract has the right to receive payment pursuant to the terms of the forward contract.

    • 9.7 Buyer Obligations

      • The Buyer of a fully executed forward contract must pay the delivery price in accordance with the terms of the forward contract.

    • 9.8 Seller Obligations

      • The Seller of a fully executed forward contract must convey to the Buyer the rights under the forward contract in accordance with the terms of the forward contract.

  • 10.Settlement of Forward Contract

    • 10.1 Eligibility to Settle a Forward Contract

      • Only a Participant of the Exchange may settle a Forward Contract on the Exchange.

    • 10.2 Essential Elements of a Settlement of a Forward Contract

      • Settlement of an executed forward contract requires the approval of both the Buyer and Seller of the Final Agreed Upon Price of the forward contract.  Approval requires assent to the Final Agreed Upon Price by both Buyer and Seller.
        • (a) The Buyer assents when it either enters or agrees to the entry of a Bid Price that equals the related Ask Price.
        • (b) The Seller assents when it either enters or agrees to the entry of an Ask Price that equals the related Bid Price.
        • (c) The Buyer and Seller assent to the Final Price when they agree to a forward contract that contains either a single Price Parameter or a combination of Price Parameters that describes a willingness for the Final Price to be a multiple of a benchmark price.

    • 10.3 Time-Period for Challenging the Final Agreed Upon Price

      • Subject to the rules within this section, a Participant may challenge the Final Agreed Upon Price for which assent was given in accordance with section 10.2.
        • (a) Variable Price with Single Price Parameter. The parties have ten (10) calendar days following notice from NPREX to Challenge the Final Agreed Upon Price where the forward contract includes one Price Parameter, with or without Price Bounds.
        • (b) Fixed Price with Price Bounds. The parties cannot Challenge the Final Agreed Upon Price where the forward contract includes Price Bounds but does not include at least one Price Parameter.
        • (c) Fixed Price. The parties cannot Challenge the Final Agreed Upon Price where the forward contract includes a non-zero Price Cap and a non-zero Price Floor that share the same value.

    • 10.4 Disputed Settlement

      • A settlement is disputed when the Buyer and Seller have agreed upon an Agreeable Price Range but cannot agree upon a price within the Agreeable Price Range. The Buyer will pay to NPREX the upper bound of the Agreeable Price Range and the Seller will receive from NPREX the lower bound of the Agreeable Price Range where:
        • (a) the contract includes a blank, or null, Price Parameter Cap and a blank, or null, Price Parameter Floor,
        • (b) the Pricing Terms within the forward contract include a positive Price Floor, and the Price Floor is not equal to the Price Cap, and
        • (c) fifteen (15) calendar days have passed since notice of an unsettled transaction was conveyed by NPREX to the Buyer and Seller.

    Last modified: October 5, 2020