Taxation On Public Data Via The API Management Layer

I'm involved in some very interesting conversations with public data folks who are trying to push forward the conversation around sensible revenue generation by cities, counties, state, and the federal government using public data. I'm learning a lot from these conversations, resulting in the expansion and evolution my perceptions of how the API layer can help the government develop new revenue streams through making public data more accessible. 

I have long been a proponent of using modern API management infrastructure to help government agencies generate revenue using public data. I would also add that I'm supportive of the crafting of sensible approaches to developing applications on top of public data and API in ways that generate a fair profit for private sector actors. I am also in favor of free and unfettered access to data, and observability into the platform operations, as well as ALL commercial interests developing applications on top of public data and APIs. I'm only in favor of this, when the right amount of observability is present--otherwise digital good ol boy networks form, and the public will lose.

API management is the oldest area of my API research, expanding into my other work to eventually define documentation, SDKs, communication, support, monetization, and API plans. This is where you define the business of API operations, organizing APIs into coherent catalogs, where you can then work to begin establishing a wider monetization strategy, as well as tiers and plans that govern access to data, content, and algorithms being made available via APIs. This is the layer of API operations I'm focusing on when helping government agencies better understand how they can get more in tune with their data resources, and identify potential partnerships and other applications that might establish new revenue streams.

A portion of this conversation that I am having was involved in the story from Anthony Williams about maybe government data shouldn't always be free, where the topic of taxation came up. One possible analogy for public data access and monetization was brought up as a reference to the Vehicle-miles Traveled (VMT) tax, injecting the concept of taxation to my existing thoughts on revenue generation using API management. I've considered affiliate and reseller aspects to the API management layer before, applying percentage based revenue and payments on top of API access, but never thought about a government taxation layer existing here.

I thought my stance on revenue generation on public data using API management was controversial before, adding in concepts of taxation to the discussion is really going to invigorate folks who are in opposition to my argument. I'm sure there is a libertarian free web, open data advocate, smaller government Venn diagram in there somewhere. I'm not too concerned, as the monetization is already going on, I'm simply talking about making it more observable, and in favor of revenue generation for data stewards and government agencies. I'm confident that most won't folks in opposition won't even read this paragraph, as it's buried in the middle of this post. ;-)

I take no stance on which data, content, or algorithms should be taxed, or what that tax rate should be. I leave this to data stewards and policy makers. My objective is to just introduce folks to the concept, and marry with the existing approaches to using APIs to develop digital products and services in the private sector. However, if I was wearing my policy maker hat I would suggest thinking about this as a digital VAT tax, "that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destination-based tax, where the tax rate is based on the location of the customer."

My thoughts on a government tax at the API management layer are at an early stage. I am just exploring the concept on my blog--this is what I do as the API Evangelist. I'd love to hear your thoughts, on your blog. I am merely suggesting a digital VAT tax at the API contract layer around public data and APIs when commercial activities are involved. Eventually, I could see the concept spread to other sectors as the API economy becomes a reality, but I feel that public data provides us with a rich test bed for a concept like this. I'm considering reframing my argument about charging for commercial access to public data using APIs as taxing commercial usage of public data using APIs, allowing for tax revenue to fund future investment in public data and API efforts.

As I remove my API Evangelist hat and think about this concept, I'm not 100% sure if I'm in agreement with my argument. It will take a lot more polishing before I'm convinced that taxation should be included in the API management layer. I'll keep exploring, and play with a variety of potential use cases, and see if I can build a case for API taxation when public data is involved, and applications are generating surplus value in the API economy.