The new blockchain solution can be applied to any industry where intellectual property or assets are licensed, including media and entertainment industries.
Yesterday EY and Microsoft launched a blockchain solution for content rights and royalties management. Aiming to streamline the costly and time-consuming processes in entertainment rights and royalties, the solution is first being deployed within gaming with Microsoft and its game publisher partners.
EY and Microsoft designed the solution to serve any industry where intellectual property or assets are licensed to other parties and where the creators are paid royalties based on royalty agreements. Within this value chain – which can include authors, song writers, production houses, developers and more – the intellectual property generates millions of transactions aggregating to billions of dollars per month in royalties to be paid. The royalty calculations along the value chain are currently mostly manual and generally managed via offline data sources.
The new rights and royalties management solution is designed to enable increased trust and transparency between industry players, significantly reduce operational inefficiencies in the rights and royalties management process, and eliminate the need for costly manual reconciliation and partner reviews.
In addition, the solution aims to provide near real-time visibility of sales transactions to the participants in the blockchain network and to help the participants to react to market needs faster and more effectively because they will get timely, improved insights into the content that is being purchased.
The embedded smart contract architecture is designed to enable accurate and real-time calculation of each participant’s royalty position, providing enhanced visibility for recording and reconciling of royalty transactions.
The underlying network is built using the Quorum blockchain protocol and Microsoft’s Azure cloud infrastructure and blockchain technologies, and implements confidentiality of agreements across entities.
Microsoft’s gaming partners participating on the network will get improved visibility to the transactions versus the legacy process, which could take up to 45 days or more. The participating partners will be able to generate accounting accruals on a daily basis and use the timely data to improve their forecasting.
Ubisoft, one of the world’s leading game publishers and a Microsoft gaming partner, is testing the solution.
Microsoft intends to deploy the rights and royalties blockchain network with interested gaming partners in a phased manner. When fully operational, this blockchain network is expected to encompass thousands of Microsoft royalty partners and process millions of transactions per day, making it one of the world’s largest enterprise blockchain ecosystems.
As Paul Brody, EY Global Innovation Leader, Blockchain, said, “The scale, complexity and volume of digital rights and royalties transactions makes this a perfect application for blockchains. A blockchain can handle the unique nature of each contract between digital rights owners and licensors can be handled in a scalable, efficient manner with an audit trail for the participants. By deploying this on Microsoft Azure, we believe this will be highly scalable across thousands of royalties and content partners.”
Grace Lao, General Manager of Finance Operations, Microsoft, is sure that deploying this blockchain solution will allow the company to efficiently manage high volumes and automate processes, while at the same time improve partner satisfaction and enhance compliance. Smart contract technology is far more flexible and scalable than any prior solution for managing business agreements. Therefore, Microsoft looks forward to deploying this solution across the company’s gaming ecosystem and exploring additional blockchain applications for other finance processes at the company.
EY and Microsoft are currently deploying the solution with Microsoft’s key business partners and will explore opening the solution to other partner organizations as a general exchange infrastructure for royalties-related transactions on everything from software to digital media.
This development builds on other blockchain initiatives from the EY organization including blockchain for automotive services; the world’s first marine insurance blockchain platform; and a suite of blockchain audit technologies that enhances the ability to perform an in-depth review of cryptocurrency business transactions.
EY was named a leader in the HfS Winners’ Circle in its report entitled State of the Enterprise Blockchain Services Market. EY was noted for excellence in both innovation and execution, as recognized by clients.
As Saurabh Gupta, HfS Chief Strategy Officer, said, “This solution, developed jointly by EY and Microsoft, represents a coming of age for enterprise blockchain adoption as it starts to step out of the laboratories and into the real world. EY’s strengths related to investment in and commitment to the blockchain, end-to-end service, technology-agnostic approach and ability to drive adoption beyond proofs of concept and pilots make it an excellent collaborator with Microsoft. Together, these organizations are developing a unique capability that uses blockchain to address and solve the complexities of content royalty computation, tracking and payments, which has the potential to revolutionize the digital rights management process.”