Are There Really Any Monetization Opportunities Around Open Data And APIs?

One of my readers recently reached out to me, in response to some of my recent stories of monetization opportunities around government and scientific open data and APIs. I'm not going to publish his full email, but he brought up a couple of key, and very important realities of open data and APIs that I don't think get discussed enough, so I wanted to craft a story around them, to bring front and center in my work.

  • Most open data published from government is crap, and requires extra work before you can do anything with it
  • There currently are very few healthy models for developers to follow when it comes to building a business around open data
  • Business people and developers have zero imagination when it comes to monetization -- aka ads, ads, ads, and more ads.

My reader sums it all up well with:

I don't dispute that with some pieces of government data, they can be integrated into existing businesses, like real estate, allowing a company to value add. But the startup space levering RAW open, or paid government data is a lot harder. Part of my business does use paid government data, accessible via an API, but these opportunities the world over are few and far between in my mind.

I think his statement reflects the often unrealized challenges around working with open data, but in my opinion it also the opportunity when it comes to the API journey, when applied to this world of open data.

APIs do not equal good, and if you build a simple API on top of open government data, it does not equal instant monetization opportunity as an API provider. It will take domain experts (or aspiring ones) to really get to know the data, make it accessible via simple web APIs, and begin iterating on new approaches to using the open data to enrich web and mobile applications in ways that someone is willing to pay for.

The reality of taking an open data set, cleaning it up, and then being able to monetize access to it directly via an API is simply not a reality, and is something that will only work in probably less than 5% of the scenarios where it is applied. However this doesn't mean that there aren't opportunities out there when it comes to monetizing adjacent to, and in relationship to the open data.

Before you can develop any APIs that any business or organization would want to pay for you have to add value. You do this by adding more meaningful endpoints that do not just reflect the original data or database resources, and provide actual value to end users of the web and mobile devices that being built--this is the API journey you hear me speak of so soften.

You can also do this by connecting the dots between disparate data-sets, in the form of crosswalks, and the establishing common data formats that can be applied across local, and regional governments, or possibly an industry. Once common data formats and interface models are established, and a critical mass of high value open data, common tooling can begin to evolve, creating opportunities for further software, service, and partnership revenue models.

The illness that exists when it comes to the current state of open data is something partly shared between early open data advocates when it came to over-promising the potential of open data, and their own under-delivery, as well as the governments under-delivery when it came to the actual roll-out and execution around their open data efforts. Most of the data published cannot be readily put to work, requiring several additional steps before the API journey even begins--making more work for anyone looking to develop around it, putting up obstacles, instead of removing them.

There is opportunity to generate revenue from open data published by government, but it isn't easy, and it definitely isn't VC scale opportunity, but for companies like HDSCore, when it comes selling aggregate restaurant inspection data to companies like Yelp, there is a viable business model. Companies that are looking to build business models around open data need to tamper down their expectations of being the next Twitter, and open data advocates need to stop trumpeting that open data and APIs will fix all that is wrong with government. We need to lower the bar, and just get to work doing the dirty work of exposing, cleaning up, and evolving how open data is put to work.

It will take a lot of work to find more of the profitable scenarios, and it will take years and years of hard work to get government open data to where it is default, and the cleanliness and uselessness levels are high enough, before we see the real potential of open data and APIs. All this hard work, and shortage of successful models, doesn't mean we shouldn't do it. For example, just because we can't make money providing direct access to Recreational Information Database (RIDB), doesn't mean there isn't potentially valuable APIs when it comes to understanding how people plan their summer vacations at our national parks--it will just take time to get there.

My Adopta.Agency project is purely about the next steps in this evolution, and making valuable government "open data" that has been published as CSVs and Excel, more accessible and usable, by cleaning them up and publishing them as JSON and / or APIs. I am just  acknowledging how much work there is ahead of us when it comes to making the currently available open data accessible and usable, so we can just begin the conversation about how we make them better, as well as how we generate revenue to fund this journey.