Weekly Update

Future of data markets uncertain

The recent closure of UK data marketplace, Kasabi, raises some interesting questions about the future of data marketplaces and whether there is  a real business case for buying and selling data online.

Talis, the company that spun out Kasabi said in a blog post:

We are still too early in the open data revolution for third-party data marketplaces to really have a clear niche. Many of the other startups exploring similar ideas have already begun to pivot and explore different aspects of their vision.

Sources familiar with Kasabi’s business said it was too targeted at developers and too wedded to a particular technology approach. Other companies building data marketplaces include Infochimps, Microsoft Windows Azure data market, AggData, DataMarket and Factual. There are probably others too.

The vision for data marketplaces and data as the new platform, is awe-inspiring. They maintain that data that’s aggregated and available to the public could lead to new business models and innovation that we are only just beginning to explore. Publishing data, they say, holds governments, companies and public services accountable. We can see how well they are doing and whether things are improving or getting worse. And by collecting and analyzing the data we can see how good the data itself is, whether it could be improved, or should be collected at all. Data is also much easier to store and preserve long term, when it’s is open and available to all.

Even the Vatican is beginning to relax the secrecy surrounding its library of ancient documents, with a view to preservation. Consider history. A collection of more than 400,000 papyrus scrolls containing a substantial amount of knowledge of the ancient world was destroyed in a fire at the Royal Library of Alexandria in AD 391. Academics are divided over the repercussions of this loss of knowledge, but it is thought by some to have been an irretrievable setback to civilization. With the digitization and preservation of information it’s hard to imagine how this kind of vast extinction of records could happen again, barring the destruction of the Internet.

In general, we appear to be moving towards a world in which information is more open and available than ever before. So why does the buying and selling of data still seem like a stretch?

First of all, there’s so much free data and so many free APIs, that the thought of paying money for it seems incongruous. Secondly, it’s not really the data itself that’s useful; it’s the analytics about that data that’s interesting.

Pete Skomoroch, data scientist at LinkedIn notes that it would be inefficient for every company to build their own location database, so having a marketplace that provides location data makes some sense. This is a key part of Factual’s data market. He said he could also see some value in companies outsourcing non-core competencies around data cleaning, for example, like paying taxes for road maintenance.

It would seem that just having a lot of data in a marketplace is not enough. Data marketplaces will need to convince buyers and sellers that the data they hold is information users couldn’t get for free elsewhere and then they need to do something with it, like cleanse it, or analyze it and then people might pay for it.  They will also need to convince customers that it’s secure and that they can protect the privacy and confidentiality of that data if necessary, something that’s still holding up many enterprises from moving data into the cloud.

GigaOM Pro analyst and semantic web expert Paul Miller wrote that data marketplaces will need much more nurturing if they are to become real businesses.

Question of the week

Will data marketplaces be big business?