Monday, January 25, 2010

8 One-Way Business Models for Linked Data

Real Wheels - Travel Adventures (There Goes a Train/Plane/Bus)One of the videos that I was forced to watch many times when my boys were younger was There Goes a Train. It's a pretty good video. I learned many things, including the fact that locomotives don't have steering wheels. Yeah. Pretty obvious if you think about it for even a moment. It's so unfair. Without the switches, the rail network would be pretty useless, but no one will ever make a video entitled There Sits a Switch.

In electronics though, the switch is the star. With a switch, you can modify and route information; with a wire you can only send it from one point to another. You need good switches to make a computer or a network; even though photons are faster and easier to move from one place to another, computers are still based on electrons because electronic switches are so much better than optical switches.

Linked Data is a label for a set of technologies that are trying to make information move around the internet more easily and with more meaning. The Linked Data vision is one where many entities acting cooperatively and globally create a web of data much more powerful and meaningful than any single entity could bring about.

For the Linked Data vision to become a reality, each entity must have a strong motivation to cooperate; each entity must have a viable business model. If the business models were easy, the Linked Data vision would already be a vibrant reality.

Scott Brinker recently launched a round of discussion about seven business models that can make Linked Data viable. Leigh Dodds contributed some important insights in his followup, prompting Brinker to add an eighth model.

Here are Brinker's eight business models for Linked Data (somewhat relabeled based on who's writing checks):
  1. Subsidy. Entities such as governments with a mandate to make information available will pay to have it linked into a global web of information.
  2. Subscription. People will pay for valuable data, and will pay more for data that has been linked to a global web of information.
  3. Advertising. Advertisers will pay to information in raw data feeds.
  4. Authority. People will pay for the validation and certification of data.
  5. Affiliate marketing. Merchants will pay sales commissions on sales resulting from affiliate links in embedded in the global web of data
  6. Service Enhancement. People will pay for services which have been enhanced by data from a global web.
  7. Search Engine Optimization. Search engines will send you more traffic if you give them more meaningful data.
  8. Brand Enhancement. Your reputation will be burnished if you emit lots of good information.
(I should note that Brinker describes each model a bit differently so that he can add a dimension that characterizes whether data is delivered raw or as an application.  I find that this dimension is not at all orthogonal. A data driven subscription service is a service that makes use of data, but the core business model is not to sell a data subscription.)

There are difficulties with all of these business models, but it strikes me that each of them will only work in one direction, like a train track without switches. Either they work for emitting data, or they work for consuming data, but none of the models work in both directions at the same time. If you're providing a service that's either based on Linked Data or enhanced by it, you can pay for the data, but if you send that data back out, your competitors get the data for free. Conversely, if you're emitting data, it's hard for you to pay for it.

Imagine you're in the book metadata business. You can use several of these models to support creation of book metadata, or you can consume book-related metadata to provide book-related services. But what if you want to support an activity of aggregating book data or fixing errors in book metadata? None of these models will work for you because you'll either be competing with the entities you get data from, or you'll be competing with entities you send data to.

What's missing from this list is a business model for the Linked Data switch. Entities that take in Linked Data, improve it or otherwise add value and reemit it as Linked Data have no solid business model to run on. Everyone active so far in the Linked Data business is either a data sink or a data source. To realize the full potential of Linked Data, there need to be viable switches, both collecting and emitting Linked Data.
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  1. Every Linked Data demo link I put out on Twitter is about:

    1. LINK as unit of value exchange;
    2. value is question being: navigable Linked Data Mesh via proxy/wrapper URIs.

    Our URIBurner service is all about generating Linked Data meme compliant generic HTTP URIs that expose highly navigable Linked Data meshes. For example, you will notice that we perform lots of lookups across other Linked Data Spaces.

    Yes, you need the LINKs to work in many directions, side-ways included :-)


    1. -- collection of Linked Data meshup links

    2. -- specific example of one link exposing a mesh of data from Amazon, CNET etc..

    3. -- easy way to get your stuff exposed to burgeoning Web of Linked Data.

  2. Kingsley, great links. Which business model does URIBurner use?

  3. Hi, Eric -- thanks for picking up on my post and sharing your thoughts. I find this to be a fascinating topic, and I'm really enjoying the conversation.

    I confess, my original post suffers from the sin of oversimplification. I wanted to illustrate, primarily to a non-technical audience, that the business cases for linked data could range from direct revenue to indirect brand marketing. The 7 business models I listed are points along that continuum -- I sort of wedged Leigh's sponsored model up at the top of that, but it's not a perfect fit. First sign that a model is taking on water.

    When I wrote the post, I was thinking about these models mostly in the context of emitting data, admittedly one way.

    However, I agree that this "axis of revenue" is not the only -- maybe not even a particularly good -- way to categorize linked data business models. The two-way potential of linked data -- networks of interdependent data emitters and consumers -- has a lot of interesting possibilities. What you describe as a "switch," I could also envision as a kind of "dominant exchange" of multi-party data flows. In my original 7 models, I would see that as a kind of "authority" business.

    But, as they say: in theory, there's no difference between theory and practice -- but in practice there is. Real-world implementations of are likely to defy such overly neat categorization.

    And I'm sure there will be novel models that I can't even begin to imagine.

    But it's fun to try.