Wednesday, December 2, 2009

Databases are Services, NOT Content

I'm very grateful for advice my fellow entrepreneurs have given me; when you meet someone else who has started a company you have an instant rapport from having shared a common experience. I remember each bit of advice with the same stark clarity that characterizes the moment I realized that Santa Claus was the neighbor dressed up in a white beard and a red suit..

A business owner who I've known since sixth grade gave me this gem: "My secret is providing the best service possible, and charging a lot for it." In executing my own business, I did pretty well at the first part and could have done better at the second part.

As I wrote about the effect of database rights on the postcode economy, I kept wondering if I would have done anything differently in my business if that database protection had been available to me. Would I have charged more for the database that my company developed?

In the comments to that post, I was alerted to a book by James Boyle, called The Public Domain. Chapter 9 in particular parallels many of the arguments I made. One thing I found there was something I had wanted to look for- information about how the database industries in general have done since the "sweat of the brow" theory for copyright was disallowed by the Supreme Court. It turns out that the US database industry has actually outpaced its counterpart in the UK since then by a substantial margin. Why would that be?

I think the answer is that building databases is fundamentally a service business. If your brow is really sweating, and someone is paying you to do it, then it's hard to think of that as a "content" business. Databases always have more content than anyone could ever want; the only reason people pay for them is that they help to solve some sort of problem. If your business thinks it's selling content rather than services, chances are it will focus on the wrong part of the business, and do poorly. In the US, since database companies understand that their competition can legally copy much of their data, they focus on providing high quality added value services, and guess what? THEY MAKE MORE MONEY!

Then there's Linked Data. Given that database provision is fundamentally a service business, is it even possible to make money by providing data as Linked Data? The typical means for prodecting a database service business is to execute license agreements with customers. You make an agreement with your customer about the service you'll provide, how much you'll get paid, and how your customer may use your service. But once your data has been released into a Linked Data Cloud, it can be difficult to assert license conditions on the data you've released.

It's been argued that 'Linked Data' is just the Semantic Web, Rebranded, but it's also been noted both Linked Data is sorely in need of some proper product management. Product management focuses on a customer's problems and how the product can address them. You can believe me because I've not only managed products, I've had 2 whole days of real product management training!

One thing I was taught to do in my Product Management class was to come up with a 1 sentence pitch that captures the essence of the product. When I was an entrepreneur, this was called the elevator pitch. After thinking about it for about 9 months I've come up with a pitch for Linked Data:
Linked Data is the idea that the merger of a database produced by one provider and another database produced by a second provider has value much larger than that of the two separate databases.
or, in a more concise form, V(DB1+DB2)>>V(DB1)+V(DB2).

Based on the products that have been successful this year in the application of semantic web technologies, it looks to me that the most successful have been focused on what I saw Tim Gollins tweet that Ian Davis called "Linked Enterprise Data" (attributing the term to Eric Miller). If the merged databases are contained within the enterprise, the enterprise clearly reaps all the added value. Outside the enterprise, however, the only Linked Open Data winners so far have been the ones who have built services on databases merged from others.

Proper product management would have made it a goal for Linked Open Data to have data contributors share somehow in the surplus value created by the merged services. In the next couple of weeks, I hope to describe some ideas as to how this could happen.


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