Blockchain for Content Rights and Royalties Management for Media and Entertainment
EY and Microsoft have launched a blockchain solution for content rights and royalties management which is aimed 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. The companies have 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 etc. – 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 as they 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 collaborating with Microsoft on this initiative.
Loic Amans, Senior Vice President of Finance & Strategic Planning at Ubisoft, said: “We are always looking at how to leverage emerging technologies in all facets of our business. The opportunity to collaborate with EY and Microsoft on blockchain use cases in the domain of digital contracts and royalties is truly exciting.”
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.
EY Global Innovation Leader of Blockchain, Paul Brody commented: “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 at Microsoft, remarked: “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. 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.”
Partner of Software Engineering Manager at Microsoft, Brad Wright explained: “Powered by Microsoft Azure and blockchain technology, this solution helps demonstrate our ability to enhance trust with our gaming partners, and strengthen security, transparency and payment accuracy through the power of blockchain. We’re thrilled to work with EY and our gaming partners to streamline this business.”
Deep Ghumman, EY Global and EY Americas Blockchain Finance Lead for Advisory Services, stated: “Enterprises are looking to use blockchain technology to solve their business challenges. They are especially looking for scalable blockchain products that can easily plug into their existing processes and systems. The rights and royalties blockchain solution on Microsoft Azure is a great example of how blockchain will transform the way we do business and how EY and Microsoft are collaborating to empower digital transformation with blockchain.”
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.