Frequently Asked Questions

  • What is NPREX™?

    NPREX™ ("NPREX") is a marketplace, or a transactional platform, for direct licensing transactions of compositions and sound recordings between rights owners, such as music publishers or music labels, and music users such as Radio stations, TV stations and networks, digital streaming services or general licensing establishments.

  • 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 adminstration 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 a marketplace for licensing by rights owners (licensors) and music users (licensees).

    NPREX is not a licensor or licensee and receives no assignments of any kind. NPREX has 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.

    NPREX charges a set transaction fee which is agnostic as to the amount of the license fee. Like prices on a financial exchange, the price of a license that prevails on 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 the PRO, NPREX enables arm's length transactions between rights owners and music users.

  • How is NPREX™ good for the industry?

    NPREX enables rights owners and music users to transact directly and solves the 100-year old coordination problem between the rights owners and music users. The centerpiece of NPREX and the thing that makes direct licensing both efficient and ground-breaking is its price mechanism. The NPREX price mechanism is what makes the license fees themselves rational and well-informed.

    NPREX provides an economic solution to the problem of how to price a performance rights music license. This solution is a formula that maps music usage, the bargaining power of the rights owner, and the ability to pay of the music user to a price - and not just any price. Prices that emerge from this formula constitute an equilibrium that ensures that the rights owners make as much profit as possible under the circumstances. Prices that emerge on NPREX are agreed upon willingly by the parties.

    Acceptable price ranges emerge from the price mechanism. Any ex post deals struck by the parties will fall within this acceptable price range. What makes the price range "acceptable"? The prices are calibrated with the agreed upon value(s) of the bargaining power of the rights holder. Whereas the simplicity of the Price Parameter makes licensing simple and efficient, the acceptable price ranges based upon the agreed upon Price Parameters make settling the license prices simple and efficient. NPREX will create an acceptable price range as between a licensee and licensor. To the extent the two do not want to negotiate, the range is just a single price that the two will either approve or not. To the extent the licensee and licensor want to negotiate, they may do so within the acceptable price range.

  • How does NPREX™ benefit the rights owners (publishers and labels) and the creators (writers and artists)?

    NPREX is the efficient and fundamentally sound, one-stop-shop for rights owners to license their songs and recordings. NPREX makes licensing simple. The rights holder will make a single quote for a license to all music users of a given type. For instance, the rights holder will make a single quote to all commercial radio stations that perform music. The rights holder will not have to make a quote for each individual station.

    NPREX utilizes automated licensing. An automated licensing process will handle many of the licensing transactions. Rights owners and music users that automate their licensing profiles will never even have to interface.

    NPREX is a fundamentally sound licensing mechanism. NPREX is a marketplace that offers an efficient and intelligent direct licensing mechanism that facilitates transactions between music users and rights owners according to a well-functioning price mechanism that complies with first principles of economics and both copyright and antitrust law.

    NPREX gives control to the rights holder who uses it to maximize the value of its licensing portfolio. Through NPREX, the rights holder has control to price its license(s) in order to maximize the profitability of licensing. Embedded within NPREX is a pricing model that describes 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 rights owner and their current quotes of bargaining power, and the extent of music usage by the music user.

    Only NPREX knows the current quotes of bargaining power of the all rights owners. It does not share this data with the rights owners, but it does incorporate this information into the prices NPREX delivers to the rights owners. In this way, the NPREX price mechanism knows all and can help move each and every rights owner toward a rational price, thereby moving the entire market toward a rational price equilibrium.

    NPREX protects the rights holder from antitrust complications by removing from its prices the antitrust problems associated with fractional licensing. Rights owners are insulated from further antitrust issues associated with fractional licenses.

    NPREX saves the rights holder money. NPREX will charge a low transaction fee. Half will come from the rights holder. The other half of the fee will come from the music user.

  • How does NPREX™ benefit the the music users?

    NPREX is an efficient licensing mechanism and makes licensing simple. The music user will make offers to all rights owners for a license of a given usage type. For instance, the music user will make a single quote to all rights owners for a license to use their music on a commercial radio station. The music user will not have to make a quote for each rights holder.

    NPREX utilizes automated licensing. An automated licensing process will handle many of the licensing transactions. Rights owners and music users that automate their licensing profiles will never even have to interface.

    NPREX's marketplace offers an efficient and intelligent direct licensing mechanism. This mechanism facilitates transactions between music users and rights owners according to a well-functioning price mechanism that complies with both copyright and antitrust law.

    NPREX enables the music user to negotiate directly with the rights owner. The music user negotiates the terms of a music license directly with the rights holder.This is the best way to ensure the music user gets the most for its money.

    NPREX corrects prices for fractional licenses. This ensures the music user pays prices associated with 100 percent licensing.

  • 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 the reason for creating different catalogues.

  • How does a rights owner become a member?

    Send us an email via the Contact tab on NPREX.com.

  • What happens if the music user does not obtain a music license?

    If music included in the NPREX database 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.

  • How does a music user become a member?

    Send us an email via the Contact tab on NPREX.com.

  • 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?

    There are two main types of transactions on NPREX. The first is a Music License. A music license conveys permission to use a specific catalogue of music owned by a particular rights holder. The second is a Waivers of the Right to Sue Music Users. Waivers of the right to sue music users for copyright infringement convey forgiveness for having used music without first obtaining a license. A waiver of the right to sue is for music users who performed music without proper authorization.

  • What does NPREX cost, and who pays NPREX?

    NPREX will charge a small percentage of each finalized transaction. The fee will likely be 5 cents on the dollar. Today, the rights owners pay the fee of the PRO. Both music users and rights owners will share the cost of the NPREX transaction. For eample, if the transaction fee is 5 percent, 2.5 percent will be paid by the licensee (music user) and 2.5 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 at the direction of the label or publisher. NPREX will use the Automated Clearing House (ACH) Network both to retrieve funds from the music user and to pay the rights owners.

  • How does NPREX work?

    NPREX enables a simple process of systematic direct licensing between rights owners and music users. The NPREX process consists of three main steps: licensing, settlement and modeling prices.

    Prior to the performance of music, a rights holder (seller) and a music user (buyer) will enter into a music licensing agreement within NPREX. This is accomplished by the rights holder entering an offer for every license period, territory, usage type and catalogue it wishes to license. It is important to note that a rights holder may create sub-catalogues within NPREX and offer to license each separately. The music user will create an offer by license period and usage type.

    A license conveys to the music user (the buyer) the right to perform the catalogue in public. The license conveys to the seller a promise by the buyer to pay a price consistent with the key terms of the license. Matching offers made by a rights holder and a music user will be matched by NPREX. This will result in a license. Any offers not accepted automatically will be reviewed by the music user on a case-by-case basis through the licensing interface. To accept these offers, the music user may either accept the offers manually through the interface or revise its outstanding offers through its profile page so as to accept any and all outstanding offers that would match the revised offer made by the music user. Rights owners and music users may continuously update their offers through their respective license profiles.

    The settlement stage occurs after music has been performed. The music user and rights holder close the direct deal and money changes hands. To close a direct deal, each side must approve the final price. That is, each side indicates through NPREX that "yes, I agree the final price is $###,###.##..." This can occur with or without negotiation.

    The finalization of the price is a process with two mutually exclusive scenarios: a simple approval process or a price negotiation. The first scenario is a simple, fixed price deal. For example, the price of the license is $10,000, irrespective of music usage. This deal may be finalized as soon as the parties agree to the terms of the license. With no music usage data to worry about, the deal is quick and easy, albeit perhaps imprecise.

    The second scenario is a single price that varies with music usage and is based on just one value of the Price Parameter. That is, the parties agree to two key things: (1) the price will vary with actual music usage, and (2) the parties will not negotiate ex post, preferring instead for the agreeable price range to be a single point. Parties who want to negotiate the price will enter into a license where the agreed-upon bargaining power of the rights owner is a range, not a single value. The parties set the Price Parameter Floor at a value less than the Price Parameter Cap. With two values of the Price Parameter, the NPREX Pricing Algorithm will generate two prices - one price for each Price Parameter. This creates a range of acceptable prices. Within this range, the parties must agree to a final price, perhaps subject to any price floor and/or price cap.

    In addition to the licensing process, NPREX also provides buyers and sellers with a budgeting tool they can use to analyze how best to price in a private and secure fashion. This budgeting tool implements the NPREX Pricing Algorithm to deliver pricing guidance in real time in binding transactions.

    With access to the NPREX Pricing Algorithm, each buyer and seller can learn to price a music license. Most importantly, each buyer and seller can learn how to set up offers to license music. 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?

    NPREX has a sophisticated formula for the price of a music license that is used to facilitate settlement of the license fee. One of the inputs to the formula is a measure of the licensor's bargaining power, called the NPREX Price Parameter. The NPREX Price Parameter is bound between zero and 10.

    Alternatively, the parties may agree that the Price Parameter is a multiple of the PRO Price, based on a pro-rata share of performances. For example, say the licensee (music user) and licensor (rights owner) agree on a price that is 101 percent of the PRO price. Say the music usage of the licensee reveals that 10 percent of its performances were associated with the licensor's catalogue and that the total price paid by the licensee to the PROs was $100. Then the fee owed to the licensor by the licensee under this license is 1.01 x 0.10 x $100 = 1.01 x $10 = $10.10.

    The licensor and licensee will agree within the music license to a value for the Price Parameter. Following execution of the music license, the music user will perform music, and these performances will be monitored where possible. NPREX will obtain monitoring data. NPREX will pass music ownership and music performance monitoring data to the price mechanism, which will refer to the music licenses within NPREX and pull the appropriate Price Parameter as between a licensee and licensor. Together with the annual revenue of the music user, these inputs will map to a price that the two sides can approve.

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

    The role of the Price Parameter is to measure the bargaining power of the rights holder. This measure is critical to both the licensing mechanism as well as the price mechanism. The Price Parameter is the key term that the music user and rights owner agree upon within the music license.

    The significance of the Price Parameter is hard to overstate: the Price Parameter is the key to calibrating the price. Regardless of the ability to pay of the music user or the actual amount of music usage, the price for the license will be rational, given the agreed upon bargaining power of the rights owner.

    The Price Parameter is seller-specific, meaning that it works for every music user, irrespective of the amount of music usage or the ability to pay of the music user. The Price Parameter makes it possible for the rights owner to quote one offer for all radio stations; one offer for all TV stations; one offer for all interactive streaming services; one offer for all non-interactive streaming services, etc. This is, in part, how NPREX solves the vast coordination problem between the many rights owners and many music users.

    NPREX combines two schools of thought in its price mechanism: the Structure-Conduct-Performance (SCP) paradigm of industrial organization and the Double Auction paradigm of auction theory. The SCP paradigm studies the determination of prices and other strategic variables as they result from the interaction of the forces of supply and demand, such that sellers consistently earn positive profits in equilibrium.

    The Double Auction is a model of direct negotiation between a buyer and a seller.

    Double auctions have multiple equilibria. In other words, anything can happen, and we ought to expect it.

    A buyer and seller in NPREX engage in a double auction. The agreeable price is calibrated according to a nonlinear price that depends on the music usage of the buyer, the ability to pay of the buyer, and the agreed-upon bargaining power of the seller. The SCP paradigm supplies this framework.

  • 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?

    To the extent a music publisher can directly license from within its PRO, the PRO will continue to try to sell its license that includes the works of the NPREX music publisher. The PRO will compete on price with its member/affiliate music publisher. Competition between the publisher and its PRO will create incentives for the publisher to undercut the price charged by the PRO for the use of the publisher's works. There is nothing wrong with this. Recognize, though, that the PRO's price for the publisher's catalogue may prove difficult to determine because the price of the PRO's blanket license does not relate to the collection of songs in the publisher's catalogue.

    If the rights holder and the music user enter into a direct license after the PRO sells its blanket license to the music user, the music user will need to recoup from the PRO so as not to pay twice for the same rights.

    If a publisher empowered another publisher to license its performance rights as agent, can the principal publisher transact on NPREX in licensing transactions on its own behalf?

    The answer depends on the terms of the administration agreement.

    If the Principal conveyed to the Agent Administrator the exclusive right to license its works, retaining no ability in itself to license its works, then the Principal will likely not have the requisite authority to license its works. That is, if the conveyance to the Agent was the exclusive authority to license the works of the Principal, then the Principal may retain no legal authority to license its catalogue.

    If Agent Publisher owes a heightened standard of care in licensing Principal's works, then the advent of NPREX or a similar service may create in the agent a duty under that standard of care to negotiate an addition to the administration agreement that would give instructions to Agent as to how to license the works of the Principal. In the absence of a new agreement, the Agent with a heightened standard of care may have to comply with common-law based rules of conduct, which may compel the Agent to discover the preferences of the Principal. This is a matter of agency law, not contract law.

    If the Agent Publisher owes no heightened standard of care in licensing Principal's works, then the agent may have little or no duty to amend the agreement. In this case, the Principal Publisher will have to request an amendment.

    In the absence of a limitation in the administration agreement, the Principal Publisher may withdraw its catalogue from its PRO according to the terms of its PRO agreement. This may trigger the duty in the Agent Publisher/Admin to exploit the works of the Principal for performance rights purposes. This may give rise to a contractual duty in the Agent Publisher to explore the use of NPREX to license its clients catalogue. At the very least, it gives the Principal and Agent an opportunity to renegotiate the administration agreement. This can all be done in advance of PRO withdrawal.

    There is a potential conflict of interest among the principal publisher and the agent publisher that serves as administrator as far as pricing in NPREX is concerned. Because NPREX empowers the licensor to calibrate its price, the licensor must make decisions as to how to price the catalogues under its control. To the extent an Administrator has its own catalogue to price along with its clients' catalogues, which may be regarded by the music user as substitutable, the Administrator may find itself in the position of having serve the best interests of competitors. To mitigate such conflicts, the Principal must provide clear guidance to the Agent/Administrator as to how to price its catalogue. Or, the Principal must retain the authority to enter its own pricing terms within NPREX. The latter is easily accomplished within NPREX.

  • How does a License in Effect impact direct licensing?

    A publisher that withdraws from a PRO will continue to receive royalty distributions from its PRO for any licenses in effect at the time of withdrawal. The license in effect clause says that even though a publisher may withdraw its catalogue from ASCAP or BMI, the songs in the catalogue remain licensed with the PRO under any licenses already in effect at the time of withdrawal. The licensee with a license in effect does not have to directly license what it already has licensed under the PRO's license.

    The ASCAP consent decree enables the use of the license in effect clause in its agreement with publishers. The BMI consent decree is silent on the use of the license in effect clause; nonetheless, BMI includes the license in effect clause in its agreement with publishers. The license in effect clause makes it easy for the publisher to withdraw and adopt.