The Role of Open Data Intermediaries

Figure 15: Extent of New Digital Products and Services as a Function of Liquid Open Data

try to get the two (or multiple) sides “on board” by appropriately charging each side”

(Rochet and Tirole 2006, 2). The importance of this approach for the analysis of how open data are used to generate sustainable value is that, unlike classical economic theory, the two sided market approach explicitly recognizes the value of network externalities (Katz & Shapiro 1985, 1986). The theory of two-sided markets builds on the notion that there are non-internalized externalities among end-users: “The starting point for the theory of two-sided markets by contrast is that an end-user does not internalize the welfare impact of his use of the platform on other end-users” (Rochet &

Tirole 2006, 3). Two-sided markets, by playing an intermediary role, will facilitate an interaction that would not occur without them and therefore create value for both sides through direct and indirect interactions and network effects.

Intermediaries help overcome five limitations of direct transactions: search costs, lack of privacy, incomplete information, contracting risk and pricing (Resnick et al. 1995;

Janssen & Zuiderwijk 2014). Accordingly, intermediaries essentially have four roles:

a) information aggregation, 2) providing trust, 3) facilitating, and 4) matching (Bailey

& Bakos, 1997). The intermediary can be an agent of any kind, a government organization, an individual, or a private company. The recent democratization of content, as well as the subsequent sharing, remixing, redistribution, and re-syndication of content in newer and more useful forms, has caused dramatic power shifts in the intermediary market (Bharadwaj et al., 2013). These trends have challenged traditional value chain thinking, while exploring innovative ways to generate value through information sharing. For instance, internet based peer-to-peer business models, often aggregated under the term Sharing Economy, have greatly disrupted the traditional intermediary model. Taxi companies, for example, are now competing against new peer-to-peer ridesharing services, which connect drivers and their personal vehicles with riders seeking transit through intermediary platforms (Cannon & Summers, 2014).

These new types of intermediaries are creating an important layer that matches demand and supply for services, utilizing economies of scale and digital technologies as well as the business models of two-sided markets.

What then, is the role of intermediaries in making a digital infrastructural resource such as open data, easily reusable and reproducible? Research shows that in its current state, open data may not be as reusable as previously assumed. A recent review of the open datasets provided in Berlin, Germany showed that approximately 90% of the data provided were published in a non-machine readable PDF format (Martin et al., 2013).

The Open Data Barometer reveals that of the 821 datasets surveyed in 2013, less than 7% of the datasets were published both in bulk machine-readable forms, and under

open licenses. Only 1.2% of open data were published as linked data (Davies 2013).

Moreover, there are multiple ODIs in most countries, where different local governments, and state government each have their own policies and standards for open data. During these early days of open data, ODIs are still heterogeneous in nature, licenses differ between initiatives and open data standards are still underdeveloped and underused. Reuse of these data suffers as a result of these issues, as well as from limited network activity in the open data ecosystem (Mayer-Schönberger & Zappia, 2011, Martin et al., 2013). For most individuals and smaller developers, these issues have actually created a substantial barrier to entry, as the efforts involved in acquiring, manipulating, and analyzing these disparate data are simply too extensive, in comparison to an uncertain and potentially non-economic payoff.

As stated in section 5.1, liquid open data is not a binary construct, but rather a complex constellation of many dimensions, ranging from licenses, to prices, to usability and technical accessibility. Making data available in their current form is, by far, not the only barrier to overcome when it comes to enabling value generation through use of open data (Conradie & Choenni 2014; Janssen et al., 2012; Martin et al., 2014; van Veenstra and van den Broek 2013; Zuiderwijk & Janssen 2014a; 2014b; Zuiderwijk et al., 2012; 2014). Another important factor is that datasets are becoming increasingly larger, introducing a new barrier for those that cannot easily download or move the data. Moreover, raw data themselves are often of little or no use to end-users who have neither the capabilities nor time to manipulate and process them (Janssen &

Zuiderwijk, 2014). Accordingly, publishing open data that are ready for use is a costly and time-demanding task. As public sectors are frequently constrained by budgetary demands, these costs constrain government´s aspirations for open data, despite the potential for value generation. However, these same issues can also introduce an opportunity for private parties that can create a business from removing these barriers to use of open data.

I propose that open data intermediaries will likely play a crucial role in the emerging open data ecosystem by facilitating data and information access for smaller organizations that may not have the capacity and capabilities to store, integrate, and analyze large and heterogeneous datasets. Intermediaries might also contribute directly to value generation by augmenting and amplifying the circulation of open data and by sanitizing and curating data coming from both public and private sources. By making data easier to access, manipulate, and use, intermediaries could drive information creation and product, service, or process innovation based on these data. The model

shown in figure 16 is an extension of the research model in figure 10, including MSPs acting as open data intermediaries.

Figure 16: MSP type Intermediaries create Synergies between Content Sharing and Commercial Products and Services

Having easy, one-stop access to data services offers a value proposition for companies striving to create a competitive advantage in an increasingly data driven world (Lindman et al., 2014). However, a large share of data-driven services is provided for

“free”, oftentimes in exchange for access to personal data (OECD, 2014). Data intermediaries need to adapt to market conditions where users are accustomed to having free access to data, information, and information services. To enable the on-going generation of valuable but free information, the data intermediaries could implement two-sided market business models. This would allow them to generate economic profit by capitalizing on the positive network externalities that arise from the interaction of multiple stakeholders that use the platform to gain access to the services provided by these intermediaries and their affiliates. Three examples of the use of these business models in platforms that make use of open data are discussed in Paper VIII.

I have previously discussed the mechanisms that explain how sustainable value can be created through use of open data. I now add a further proposition, positing that MPSs are facilitating such value generation through the creation of synergies between information sharing and market mechanisms. MSPs enable companies to move beyond simple rent-seeking and integrate the quest for economic profits with the generation of

society wide sustainable value. These platforms act as a medium between stakeholders that are collectively addressing complicated societal challenges, previously the responsibility of governments alone. Governments have already started to realize the power of these models, which thrive on sharing and interaction, and are even implementing their own MSPs where public sector, businesses and citizens can meet and interact to create sustainable value (Janssen & Estevez, 2013).