June 22, 2018

Microsoft, EY launch blockchain solution for managing content rights and royalties

Microsoft, EY

On June 21, Microsoft and EY, one of the largest professional services firms in the world as well as one of the "Big Four" accounting firms, launched a blockchain solution for managing content rights and royalties for the media and entertainment industry, with an aim to streamline the costly and time-consuming processes in entertainment rights and royalties.

The solution attempts to digitize the current process of royalty calculation that is manual and managed via offline data and will be first deployed in gaming within Microsoft and its game publisher partners. Reportedly, Ubisoft—a French video game publisher which is the fourth largest publicly-traded game company in the Americas and Europe and a Microsoft gaming partner—will be one of the early adopters of this solution.

Microsoft intends to deploy the rights and royalties blockchain network with interested gaming partners in a phased manner. Notably, the solution when fully operational will encompass thousands of business partners and process millions of transactions per day, making it one of the world's largest enterprise blockchain ecosystems and will also provide Microsoft’s gaming partners with improved visibility to the transactions versus the legacy process, which could take up to 45 days or more. The partners will be able to generate accounting accruals on a daily basis and use the timely data to improve their forecasting.

The blockchain solution has an embedded smart contract architecture that 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 network is built using Quorum blockchain protocol and Microsoft’s Azure cloud infrastructure and blockchain technologies and implements confidentiality of partnership agreements across entities.

The rights and royalties management solution enables increased trust and transparency between industry players, significantly reduces operational inefficiencies in the rights and royalties management process, and eliminates the need for costly manual reconciliation and partner reviews. In addition, the solution aims to provide near real-time visibility of sales transactions to all participants in the blockchain network and enables them to react to market needs faster and more effectively.

Importantly, the solution was designed with an aim to serve an 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, etc, intellectual property generates millions of transactions aggregating to billions of dollars per month in royalties to be paid.

Both 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.

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