If the Government’s Data is an Asset, Why Are They Giving it Away for Free?

If the Government’s Data is an Asset, Why Are They Giving it Away for Free?

By Jake Bittner

Over the past six years, our government has invested quite a bit of effort in “Open Data” initiatives. These programs encourage agencies to make their data publicly accessible in order to increase transparency, encourage civic engagement, and ostensibly create opportunities to spark innovation and drive the economy.

Open Data seems like a great deal for constituents. It gives them an up-close look at the data gathering efforts funded by their tax dollars. In other words, it increases transparency and civic engagement – two things that both government leaders and constituents are constantly asking for. Boston About Results and CMS.gov/dashboards are great examples of these efforts.

While Open Data is increasing government transparency and civic engagement, it’s falling short of delivering on its promise of driving economic growth, creating jobs, and providing opportunities for innovation and entrepreneurship. Why is Open Data failing to live up to its expectations? There are two primary reasons:

  1. The majority of data available through “Open Data” initiatives isn’t conducive to solving high-value problems. The data is typically useful for academic studies or social welfare projects, but not for industries with significant economic value.
  2. Even if a dataset could be used to solve a high-value problem, most entrepreneurs should be skeptical of building a company around open data, since, by definition, it’s available to anyone, anywhere in the world and is therefore non-differentiated. There’s no way for an entrepreneur to protect his/her ideas from copycats or competitors. That’s a risk few entrepreneurs would be willing to take (and few investors would be willing to financially support).

If the government truly wants to encourage entrepreneurs to develop businesses around their data, they need to stop giving it away. Instead, they should focus on establishing viable business models for companies to actually succeed with Open Data. And an operating principle of those business models should be that data is an asset, not something to be freely given away.

I’m not suggesting that we revert to a completely closed data model –
I’m recommending that the government take steps to ensure that it will get something of value in exchange for its data assets.

To really spark the economy, the government should identify high-value data and license it to well-qualified entities that are able to either

  1. Pay for exclusive or semi-exclusive access to the data, or
  2. Articulate a business plan to achieve the government’s goals along with their own business goals and be held accountable for achieving those goals.

There are a number of feasible ways to accomplish this. The government could transform their existing “hackathon” process into a competition in which businesses pitch their ideas and win exclusive access to the data. They could also create a web site that lists the types of high-value data available and the terms for licensing it and collects proposals for how entrepreneurs would use the data. To be truly successful, the government should go a step further and require a payment or hold licensees accountable for reaching defined milestones.

This process would ensure that the data would be used to provide public value (solve a problem, create jobs). It would also assure entrepreneurs and investors that their business wouldn’t be knocked-off.

By fully vetting companies and putting the proper safeguards in place, the government can be more confident in turning over their high value data (as opposed to the low value collection currently on Data.gov).

Finally, the government needs to actively market this data and the protection parameters around the data to drive interest, starting with outreach to the entrepreneurial community.

We know that this model would be successful because we’ve seen what can happen when entrepreneurs leverage high-value data and build companies around it: look at what has been done with GPS data or weather data or USPS address data – entrepreneurs have licensed this government data to solve high-value problems, create large markets , and ultimately build profitable companies that create jobs and drive the economy forward.

The Open Data initiative is based on the belief that data is a valuable asset. So why on earth would we give it away for free? If we want to drive the economy with government data (and we definitely can) we need to rethink the models around Open Data and start treating high-value government data like a high-value business asset.