This video answers a common question of whether open data can generate new revenue.
- [Narrator] A question that I receive often is, "What is the return on investment for an open data program?" It's an important question because agencies with limited budgets have to make priority decisions on where to spend money every day. Investing money in people in open data take both of those things away from investing elsewhere in a community. There is a sense that open data is good to have, but not essential. In particular, if a return on investment is not clear, open data will not be addressed by the majority of agencies that still have not yet made a commitment to it.
One of the follow up questions that is often popular as a result is whether it is possible for open data to be a source of revenue for a government agency? If this were possible, not only could the revenue pay for building and maintaining the open data program, but any additional funds could be used to supplement other revenue sources from important government programs. Let's explore these two questions. I'll begin with the question of whether there is a return on investment or ROI. In the purest form, an ROI suggests some form of monetary return.
Let's be straight on this, today realizing revenue from open data is not a practical expectation. And in most instances where open data programs are deployed, it doesn't make the list of benefits or motivations. Open data today is mostly driven by some form of the following rationale. Number one, it's the right thing to do, that is communities deserve to have access to their data. Number two, opening data creates transparency and with a more informed electorate it improves democracy.
And three, open data can be used for all sorts of problem solving, including building decision tools and useful community applications. You'll recall that we looked at some examples in a previous video. To many of us who work in the open government space these types of reasons are compelling enough as an ROI. Whether there needs to be a monetary return in the short- or long-term is largely a philosophical question for now. Okay, let's assume that at some point there is a consensus that we ought to be looking at a monetary ROI.
First, it must be said that if a third party builds a solution using open data and goes on to make a profit, then this must be seen as a positive outcome. Entrepreneurs have built thousands of apps using open data around the world, and we can only assume that jobs have been created and revenue has been generated. For examples of these apps, you can check out sites like data.gov and codeforamerica.org, but let's get to the trickier question of how a government open data portal could generate revenue.
Remember, the underlying assumption here is that simply taking existing public data and making it available on an open data portal cannot be legally monetized. In the US, people are entitled to this data without cost. You'll recall that access without restriction is one of the eight principles of open data. So we just can't charge for open data access or the normal features of an open data portal. What are we to do then? Here are just three ideas that we'll likely see explored in the months and years ahead.
Idea one: while we can't charge for access to a data set, nothing prohibits us from asking for premium for near real-time data. Since agencies are not required to provide data in near real-time, it seems like a discretionary service that could have a cost associated with it. For example, for a given data set an agency could make all data older than say one month and make it free. After all, that's the spirit of open data; however, it could say that it will provide to a user data that's only one day old for X price and another higher price for data that is only say five minutes old.
Idea two: earlier in this course we discussed the idea of file formats for data. It is a principle of open data that it be a popular and simple format to enable most accessibility; however, what about providing a very specialized format? Couldn't we monetize that? So say in addition to XLS, CSV and JSON, a file format cold be a specialized graphical format, such as XML, or a publishing format, such as ePUB.
Each specialized format could solicit a price. Finally, idea three: the assumption with open data is that it's available electronically through a website, but what happens if a member of the community wants to get expert advice on the data, including help with manipulating or visualizing the data? This is above and beyond what an agency is required to do, but it could be offered as a premium service. So if a user of open data wants to book time with an agency expert, perhaps in one hour increments to essentially acquire consulting services, this could be a billable service.
Now for each of these ideas I defer to each agency and each territory to determine what is legally and culturally permissible. I don't for a moment endorse any idea or to even claim that they are possible right now. They simply open up the possibilities of how we might think about monetizing open data. I'm confident we'll see many creative ideas in the future.
Dr. Jonathan Reichental introduces real-world use cases for open data, as well as the steps you need to take to develop and operationalize an open data program. He also explains how data scientists use open data to tell stories and drive data visualizations. Along the way, he provides numerous examples of open data in action: improving government, empowering citizens, creating opportunity, and solving public problems.
- Understanding what open data really is
- Current open data efforts around the globe
- Open data in action
- Designing an open data governance process, including policies
- Monetizing open data
- Storytelling with open data
- Selling the value of open data
- Measuring the value of open data