Microsoft, in cooperation with EY (Ernst&Young), announced an ambitious project that will simplify considerably the administration of content and license rights in the future. The solution is based on blockchain technology, which is becoming more and more popular, and could soon become appealing for all companies that have to manage complex license, patents and copyrights. Reason enough for us to take a closer look. So what does “blockchain” mean?
The alliance between Microsoft and this leading consulting service provider has already been evident for some time on a wide variety of themes in the areas of business performance and digital services. By combining EY business services with Microsoft’s comprehensive digital and cloud technologies, the two companies want to enable their customers to tap into the full digital potential across all business segments.
The largest product out of this alliance to date is probably the solution announced in mid-2018 to comprehensively cover all licensing, copyright and intellectual property processes. The technology behind this highly complex solution is called Blockchain (in this case “Quorum”) which may require a short note of explanation.
Blockchain – an elusive concept with many applications
Blockchain – a term that cannot be grasped intuitively – is basically a decentralized protocol for transactions between parties in which every change is recorded transparently. In a nutshell: a decentralized database in which data records (blocks) are linked together using cryptographic methods. As one can easily see, there is a lot of information theory and math behind this definition, which would go on far beyond this short description. It is more interesting to concentrate on the possible areas of application, the best known of which so far is crypto currency. Bitcoin is based on this technology and was one of the first applications.
However, the possible areas of application are much more diverse and by no means limited to the financial sector. In contracts, securities trading, music industry, voting systems, etc., Blockchain has the potential to become a real game changer and fundamentally transform processes in all industries that rely on secure transactions with maximum transparency – without intermediaries and without a central authority.
Great potential for the media and creative industries
This brings us back to the solution presented by Microsoft and EY, which is intended to revolutionize the entire license sales process using Blockchain. According to the two companies’ press release, “EY and Microsoft have developed the solution to address any area where intellectual property or assets are licensed to other parties and where authors receive royalties based on agreements”. This statement gives an idea of how far the benefits of this platform can go. Authors, photographers, software developers, journalists, graphic artists, media houses, agencies, and artist management are included. The group of professions and companies that have to deal with “intellectual property” and copyright on a daily basis is almost endless.
Blockchain in the gaming sector
You can imagine the complexity of this project. The idea itself is not new. The tracking of license fees and copyright has already been demonstrated several times as an ideal blockchain example. So far, however, due to its extremely high complexity, it has always remained theoretical. The approach that Microsoft and EY have taken now sounds promising. At first the solution concentrates on the gaming business of Microsoft and its Game Publisher Partners. Here, the costly and time-consuming processes regarding entertainment rights and license fees must be streamlined. Previously, license calculations in the value chain were mostly managed manually and usually from off-line data sources. Whereas participating partners previously had to wait up to 45 days for “new data”, the calculation now takes place in real time and with full transparency. This is also ensured by the embedded Smart-Contract architecture, which enables more trust and transparency between the actors. It also eliminates the need for costly manual reconciliations and partner checks.
Implementation in other gaming partners
The decision to introduce the blockchain tool in the gaming sector makes sense. A video game can generate a variety of royalties, e.g. for software developers, authors, composers and artists. So there is no lack of complexity. And scalability is guaranteed. Microsoft plans to gradually implement the network with more and more gaming partners. It is expected that it will soon include thousands of license partners and process millions of transactions every day.
Brad Wright, Microsoft’s Software Development Manager summarizes: “This solution, based on Microsoft Azure and Blockchain, shows that we can strengthen trust and improve security, transparency and payment accuracy through these technologies. We are excited to be working with EY and our gaming partners to optimize the entire business.”
In summary – a large project with a high impact on the media and creative industries. The “test run” in the gaming sector is therefore probably only the beginning of its development. This evolution will soon lead to a fundamental change in the processes between media houses, publishers and the creative sector. One last example shows that this cumbersome term “blockchain” will soon become very familiar. In Estonia, a wedding certificate can be deposited in blockchain right now.
Knut Nicholas Krause M.Sc., CEO and founder of knk, has been active as an IT consultant for medium-sized companies since 1986. As the son of a director of the Frankfurter Allgemeine Zeitung, he founded knk in 1988 and specialized in the development of knkPublishing, the only Microsoft certified publishing software worldwide. He is a visionary who explores industry trends within the publishing industry and incorporates them into the development of knkPublishing.