EY and Microsoft unveil blockchain royalties management solution

06 July 2018 Consulting.us 4 min. read
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EY and Microsoft have launched a new blockchain solution that helps media authors and licensors better manage royalties-related transactions. The smart contract solution, which will be introduced with Microsoft’s video game publishing partners, will allow for near-instant tracking of transactions, while streamlining processes and improving transparency and security.

In the media and entertainment industry, the intellectual property of creators (authors, songwriters, game developers, etc.) is licensed to third parties who pay royalties to the creators. The transactions, like someone buying a song on iTunes, a video game on Steam, or an e-book on Amazon, equate to billions of dollars per month in royalties that need to be paid. In today’s systems, the royalty calculations are mostly manual and managed through offline data sources.

In response, EY and Microsoft have launched a blockchain solution for content rights and royalty management that streamlines today’s costly and time-intensive process. The new system will increase transparency while eliminating costly manual reconciliation and partner reviews in royalties management. The blockchain solution will initially be tested with Microsoft’s game publishing partners, including industry heavyweight Ubisoft.

"We are always looking at how to leverage emerging technologies in all facets of our business,” said Loic Amans, Senior Vice President, Finance & Strategic Planning at Ubisoft. “The opportunity to collaborate with EY and Microsoft on blockchain use cases in the domain of digital contracts and royalties is truly exciting.”EY and Microsoft unveil blockchain royalties management solutionBuilt on Quorum blockchain protocol and Microsoft’s Azure cloud and blockchain tech, the solution will provide real-time visibility of sales transactions to participants, while allowing for real-time calculations of creator and licensor’s royalty positions. The almost instant availability of royalty info will allow parties to react more quickly and effectively to the market by better seeing content purchases.

Instead of the current process which can take up to 45 days or more, the smart contract blockchain solution gives network participants near-instantaneous transaction visibility. As such, partners will now be able generate accounting accruals on a daily basis.

“The scale, complexity and volume of digital rights and royalties transactions makes this a perfect application for blockchains,” remarked Paul Brody, EY Global Innovation Leader, Blockchain. “A blockchain can handle the unique nature of each contract between digital rights owners and licensors. Contracts can be handled in a scalable, efficient manner with an audit trail for the participants.”

Microsoft will initially deploy the solution with game publishing partners (like Ubisoft) in a phased fashion. In its final phase, the network will include thousands of Microsoft royalty partners, processing millions of transactions per day.

“Deploying this blockchain solution will allow us to efficiently manage high volumes and automate processes, while at the same time improve partner satisfaction and enhance compliance,” commented Grace Lao, General Manager of Finance Operations, Microsoft. “Smart contract technology is far more flexible and scalable than any prior solution for managing business agreements. We look forward to deploying this solution across our gaming ecosystem and exploring additional blockchain applications for other finance processes at Microsoft.”

In the future, EY and Microsoft will explore expanding the solution as general infrastructure for royalty transactions in everything from software to digital media.

The solution builds on EY’s blockchain ventures in other industries. The consultancy recently partnered with Microsoft and Towers Watson to create the world’s first marine insurance blockchain platform. The solution streamlines processes while linking insurers and policy holders in a secure network with an accurate and unchangeable audit trail.