Blockchain

Intellectual Property Paper Chase Makes Way For Smart Contracts

Paul McCartney sang: “You never give me your money. You only give me your funny paper.”

The sentiment could apply to royalties — the kind paid on music, published works and intellectual property of any sort. Paper checks abound — paper recordkeeping too.

Is it time for smart contracts? For blockchain — for, in essence, a shift from analog to digital, which ensures that art and commerce is paid in a timely manner and that parties know who are, well, party to the actual contracts and are in agreement, with no room for dispute?

News came this week that Ernst & Young (EY) and Microsoft are working together to bring digital royalty and copyrights management to a number of verticals. The first test case for copyrights management brought into the blockchain world through the partnership will be the gaming industry.

Any number of stakeholders are at play here, ranging from designers to makers of the end products. Under the terms of the agreement, as trade sites have reported, Ubisoft, which is a game publishing partner for Microsoft, will test the blockchain, which is, in turn, based on Quorum, a blockchain protocol.

Cut the paper chase and the analog portion of the equation (which includes the analog part of, say, picking up the phone to labor over details) and payments get swifter, amid elimination of manual reconciliation efforts. The companies have stated that the process ultilizes offline data sources, so better visibility is a condition devoutly to be wished.

As noted by The Register this week, in an academic paper published last year, ETH Zurich researchers Karl Wüst and Arthur Gervais said, “In general, using an open or permissioned blockchain only makes sense when multiple mutually mistrusting entities want to interact and change the state of a system and are not willing to agree on an online trusted third party.”

We wonder: When it comes to getting paid — and where big bucks can accrue if the creation is right (just ask Sir Paul McCartney!) — does anyone really trust anyone? Perhaps blockchain might go a ways to helping cement a level of trust.

The way it would work would be that terms of an agreement are set via smart contract. The transactions themselves would be logged on the blockchain too, which ties into the royalty amount and gives an accurate count of what is sold and when to consumers. Thus, no dispute on how well an album or song or likeness or game is selling. EY has said that blockchain can help process several million transactions daily.

If it works — indeed, if scale is in the offing — blockchain has the ability to be, in essence, a legal backstop before disputes even arise, saving time, money, paper and … dare we say it with a nod to the music business, singing in harmony?

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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