Microsoft Corporation (NASDAQ:MSFT) Launches Royalty Payment System Based On Blockchain

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Microsoft Corporation (NASDAQ:MSFT) announced that it has partnered with Ernst & Young (EY) in creating a blockchain system that will keep track of collecting and disbursing royalty payments for content rights. It will deal with royalties for software developers, musicians, authors, and other creatives and copyright owners.

The system is designed to streamline the time-consuming and expensive processes in the entertainment and other creatives rights and royalties. These have long relied on the services of middlemen who often shortchange creators.

The technology Corp intends to start deploying the blockchain platform in its large online gaming system. It is already working with companies such as Ubisoft to implement it.

For who

Both EY and Microsoft stated that they designed the system in order to offer a solution to any sector where intellectual property or assets are licensed to third parties and where the creators are paid royalties as per royalty agreements. The intellectual property sector generates millions of transactions adding up to billions of dollars to be paid monthly in royalties.

Blockchain promises to offer increased trust and transparency in the royalty payments sector. It will also make it possible to automatically collect and disburse payments. This will eliminate the need for the expensive and slow manual reconciliation process, thereby, reducing the operational inefficiencies often characterized in the rights and royalty management processes.

Complex management

Even though those behind the development of the platform are optimistic, it remains to be seen how the technology will deal with the complexity of managing copyrights and payments. For example, a video game featuring a musical clip gives rise to several royalty payment beneficiaries. The video game developer, the songwriter, the performer are technically beneficiaries. Since the rights to a given task are often bought and sold, it, therefore, creates confusion about who is entitled to a payment and where the money should go.

Therefore, the Microsoft-EY system has an uphill task of accounting and sorting out such complexities. However, the companies appear optimistic that the blockchain technology is up to the task.

Paul Brody from Ernst Young stated that blockchain can handle the unique nature of each contract between digital rights owners and licensors, and can be handled in a scalable efficient manner with an audit trail for the participants.