The Destruction of Private Data Markets

[vc_row type=”in_container” bg_position=”left top” bg_repeat=”no-repeat” scene_position=”center” text_color=”dark” text_align=”left”][vc_column][vc_column_text]Data markets have traditionally relied on privileged access to information and a monopoly over distribution. Such scarcity of data ensures that it remains both expensive and highly restrictive.

Fortunately, with the emergence of: open data, crowdsourcing and machine-to-machine communications, previously privileged information is quickly becoming commoditized. In many cases, the quality and quantity of the data available is outstripping that of commercial sources.

As example, data aggregators such as: Infogroup, Acxiom and Neustar Localeze have held the business listings market captive. If you own a business with a physical location and you want it to show-up in: navigation devices, online maps and business directories (such as then you need to pay each of the aforementioned companies an annual fee to “verify and distribute” information about your business to their list of paid subscribers.

These data aggregators enjoy the benefits of a double-sided network. They charge a business for distributing their information while simultaneously charging the data subscribers and directories for “verified” listings.

I’ve argued in the past that the supply of most data is inelastic and that price will approach zero in the long run. And, we are now seeing this trend take shape in the data broker market as well. Organizations such as and OpenStreetMaps provide the same, or better, data in a crowd-sourced manner, for free.

While they each rely on different data collection and monetization strategies, their core location data can be accessed and edited by virtually anyone with a computer or a smartphone. This results in the creation of data repositories that eliminate the paid broker in the middle.

OpenStreetMaps, for example, has 1.5 million global contributors to adding and maintaining information about locations (everything from restaurants, ATMs and physical streets). Below is a screenshot of Gaza as viewed with OpenStreetMap data in comparison to Google Maps (OpenStreetMaps on the left, Google on the right).

Open Data Market Example Image

(source credit

As evidenced by: Apple using Factual and Yelp data in Apple Maps, Garmin integrating Foursquare into their personal navigation devices, and TeleNav moving to OpenStreetMaps to power their smartphone navigation app- data consumers are now switching from proprietary data aggregators to these open data commons.

No horizontal or vertical is immune the trend. Any data that is observable, measurable, or accessible by multiple parties is subject to competition in open markets and therefore the price will fall to zero.

This is a good thing, because as information becomes more open and accessible it creates more value for society, or rather – it creates the potentiality of greater value for society.

Lastly, these shared data commons have relied heavily on contributions and edits from people. However, in the near future, contributions from machines, sensors, and bots will outweigh those from humans across all sectors.[/vc_column_text][/vc_column][/vc_row]


Here’s a cool video showing the evolution of the OpenStreetMap data over the last ten years.

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