Free is a Curious Price

This is where I may get torn to shreds by some people I really like – Open Data folk.

For the last three decades, since my early qualifications in Operational Research, through my consulting and public and private leadership roles I have been fascinated by the role of data and analytics in helping make the world better: better services, better decisions, better results.  I began my career analysing data, and helping my clients come to terms with the new world presented by the evidence.

As such my early contact with Open Data and its benefits – e.g. the spectacular apps that have been made possible by access to open data (Citymapper being my personal favourite) – was that of the newly converted.  Take a public asset, share it, and let the world use it as it wishes, in ways that are likely to be more creative and unanticipated than could have been created by a politically-accountable risk-averse bureaucracy.  Awesome.

But I have begun to doubt.  Mostly I have begun to doubt whether this applies for local government data because I daily see councils having to make agonising decisions about painful cuts, and looking to see what assets they may have that could perhaps mitigate the need for these.  But I have also begun to doubt by standing back from all of this and musing on what is the right “price” for something.

Some organisations may be able to take freely given council data and make a mint.  Shouldn’t there be a mechanism for the council, its residents and taxpayers to get at least a partial share in that?  Maybe one more children’s centre could stay open, an extra social worker … An extra temp working to clean up more datasets?

And in other cases there will be fantastic apps or analyses that could add high value to people in a locality but where there is a market failure – there simply isn’t enough in it for entrepreneurs to make it worthwhile – in those instances there may be cases where from a wider societal benefit perspective it makes sense for the council to offer grants, competitions, prizes etc to get people to use the data – ie the price should be less than zero – they should “pay people to take it away”!  Maybe it would be worth a small town off the Citymapper radar paying Citymapper to include their data, for example.  In these instances simply making your data available isn’t enough, and to grow business success (and business rates) you need to go further, and invest.

The more I think about it the more I see it as an extraordinary coincidence if the right price for a commodity just happens to be zero.

There is an important caveat to that, which is that anything for a price other than zero carries costs associated with marketing, procurement, billing etc so there is probably a region around “zero price” where you might as well call it zero – but I wonder how wide that region is?

ODI commissioned some research which shows (albeit with heavy caveating in the small print) that the open data model generates more GDP than some other models they looked at.  As a broad conclusion and in full generality I suspect that this is true.  That research didn’t consider whether more GDP could be created by the “pay people to take it away” approach and when it considered pricing models it was assuming that pricing would be based on purely commercial grounds rather than (as the public sector could do) with at least half an eye on social value implications.  Even if it were true that globally speaking free open data was beneficial, there could be some datasets where this didn’t apply, or some instances where cash-strapped councils might argue that this is just yet another instance where the costs and benefits are misaligned and act to balance their own books whilst campaigning for better alignment.  Councils would love to be able to spend more on better support to keep elderly people out of hospitals, for example, but even those who can see the wider benefit to Uk-plc of doing this nonetheless have to live within the current funding regime which offers no share of the benefit and are therefore unable to fund the “optimum” level of support.  There is surely a data parallel, and if councils can share in the benefit then more may happen.  Half a loaf …

A dataset which isn’t made open is adding nothing to GDP – if cost recovery or a modest profit, or even a mitigation of direct costs,  makes it viable to open up a dataset then that may not be better overall than opening it up for free, but it is surely better than keeping it closed.  The ODI report seems to start from the premise that the data is going to be shared, now what’s the right price for it, rather than considering (which would probably be too hard to quantify) the net benefit that would accrue if new data sets are tempted into availability by the prospect of compensation?

Do we need “freemium” type models for council data (the ODI-commissioned report seems more balanced on this – it says it would be very hard but offers examples that could show a way forward)?  Or free use of data sets for a time in an understanding that there will be licensing costs thereafter?  Do we need mechanisms to recycle profits from lucrative uses of public data to support those applications where the market playing field needs a tilt, for the wider good?  Might councils (and councillors) be more willing to open up data if they knew that there would be future mechanisms to share in financial benefits?  Would data users be more confident that their data supply would continue and continue to be updated if there was a contractual relationship in place?

Hopefully I won’t be torn to shreds, but I would be interested in a conversation about this.  Free is a curious price.

 

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2 Comments Add yours

  1. Dave Rowe says:

    “Some organisations may be able to take freely given council data and make a mint. Shouldn’t there be a mechanism for the council, its residents and taxpayers to get at least a partial share in that?”

    There definitely should be some kind of mechanism – I propose a national ‘corporation tax’ and locally ‘business rates’ 😉

    Obviously you mention business rates later on, but surely that is the mechanism for local government? Also job creation, increased spend locally, etc etc. We also provide free education to young people, is that a similar problem when people go and get minted off the back of the knowledge they’ve learned? Of course not, we know enough to appreciate it’s of public benefit.

    Hopefully there will be a time when open data is accepted in the same way that education is, as healthcare, as providing maintained roads and all the other things a local Council gets involved in.

    That’s without getting into debates about ownership of data, and the right of a public body to really claim the right to sell data as a service.

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    1. jonathanflowers says:

      Thanks for this Dave. I completely empathise with the sentiment of this. However there will be cases where the payback for the council is either not big enough to cover cost or sufficiently ambiguous that other calls on scarce resources win instead. Education is an interesting case example where I suspect that you and I share the same value set – however as a nation we are moving away from the idea of free state education (student fees, the multiple “extras” I pay for – happily because I can – for my son’s state education). The choice for councils isn’t to do open data or not, it’s to do open data or a wide range of other things which may have more obvious payback. I’m tentatively suggesting that we may need to tilt the game a little.

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