Microsoft has said its latest blockchain effort could prove that the technology has real-world value by reducing litigation around intellectual property royalty payments.
The new offering, which is backed by professional services giant EY (the trading name of Ernst & Young), offers a settlement system for industries that involve licensing and royalty payments.
Microsoft is effectively testing the technology itself, with Ubisoft, a Microsoft game publisher, putting it through its paces.
EY global innovation leader for blockchain Paul Brody said the hope is that the new system could eventually be used by Microsoft, its thousands of game publishing partners and the contractors those publishers work with, including composers, photographers, video makers, voice-over artists and the like.
Distributed ledger systems such as the blockchain are currently all the rage in the financial services industry, but Brody said intellectual property payments such as those being targeted by Microsoft and EY are a good fit because of the need for an impartial system that isn’t under the control of any one party.
The video game industry, in particular, makes a good test case because of the scale, complexity and volume of digital rights and royalty transactions it involves, he said.
“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,” Brody stated.
The cloud-based system should be scalable to thousands of royalties and content partners, he said.
Small payments that might have taken months to distribute through existing mechanisms could happen immediately, and with enough transparency to satisfy rights holders, which could lead to a reduction in payment-related litigation – a costly problem in the gaming business.
“The opportunity to collaborate with EY and Microsoft on blockchain use cases in the domain of digital contracts and royalties is truly exciting,” said Loic Amans, Ubisoft’s senior vice president of finance and strategic planning, in a statement.
The service is aimed at increasing trust and transparency between industry players, reducing operational inefficiencies in the rights and royalties management process and eliminating the need for manual reconciliation and partner reviews.
It offers nearly real-time insight into sales transactions and simplifies how royalties are paid.
The service uses the Quorum blockchain protocol and Microsoft’s Azure cloud infrastructure and supporting technologies. The smart contracts implemented by it include confidentiality protections.
Microsoft said it plans to deploy the rights and royalties blockchain network with gaming partners by phases, and expects it ultimately to process millions of transactions per day, making it one of the world’s largest enterprise blockchain systems.
EY’s Brody said the service is independent of Microsoft and could ultimately be made available to companies not connected to the software giant.
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