26 Jun, 2008
Nick Black – Common Enterprise: Building a Business on Free Data [reboot10 notes]
Posted by: Jure Cuhalev In: ideas
Image via Wikipedia
Nick Black, Common Enterprise: Building a Business on Free Data, is involved with OpenStreet made and his company Cloudmade, that is trying to figure out if itâ€™s possible to build business on top of it.
He starts with a point – nothing is free. Most free data has a cost, there are costs associated. Even though I write article for Wikipedia for free, I probably value this time more then the money I could get for it. There also some architectural costs, bandwidth, hardware etc.
Example: OpenStreet map server network card broke, even though it costs only 20 pounds, it costs about 5 hours of someoneâ€™s time.
Different free models:
Most projects distribution are free.
itâ€™s also possible to get free at point of collection or creation, like Wikipedia.
There is also lots of data, collection is paid by tax payers, and then itâ€™s given into Public domain, like US ZIP codes.
- Free to reuse
- Free to re-mix
- Free to re-sell
- Free to alter and transform
Example: taking oranges, and making orange juice at a convenient time for me, creates a great value for me and this way massively increases the amount I can make in the process.
Example: Choosing Zimbra vs. Exchange. Zimbra – 3.5 pound/month, Exchange 4.0 pound/month. Even though Zimbra is free, there is a lot of added value, and licensing at the end of the day represents only 0.5 pound/month in costs.
When the data is free, delivery becomes everything. P2P (Bit-torrent etc.) are examples of how the value changes. Itâ€™s not anymore about the money for the CD, but is it worth to me to click and download and listen to it.
Free data as valuable as an alternative hedge against proprietary data. It serves as a way to prevent vendor-lock in because I have commons alternative so I can either help myself or go to some other provider.
Examples of companies that got bit by that are Yahoo and Google maps that have problems in relation to their map providers.
When you are building a business that is available as a data in the commons, it gives you a great advantages.
But, thereâ€™s a more interesting answer to this question:
Data alone is not that useful, it needs to be augmented to add value.
Data itself is not really useful, but when itâ€™s combined with software and communities, it gets really powerful. In addition, you want to create a circle that feeds itself and gets better and better with time.
Some comments on distributing free data
Once I distribute something I canâ€™t stop it being redistributed. And we donâ€™t want to stop you, since itâ€™s a fundamental part of data redistribution. You have to make sure that data redistribution is an integral part of your business.
Creative-Commons is your friend. Links are currency on the Internet. Using linking back as an Attribution requirement and this at the end of the day drives back traffic, SEO, etc.
Can I pay people to collect free data?
The reason this is significant, it takes a long time to build communities.
Coaseâ€™s Penguin (Yochai Benkler)
Commons-based Peer production:
- Non-monetary motivation (people have fun, and instead of obsessing over why, lets give them more ways to have fun doing this stuff)
- Discrete multisize peices (it should be low cost integration, itâ€™s got to be easy to do)
- Low cost integration
Communities give you so much more.
Aggregate and Organize (Geo-Commons)
Create a Market place (A Flickr market place; Weogeo – ebay for data)
Suppose all maps are free:
- Value can be created by end product
.. at the end of the day itâ€™s all about the communities: they greatly enhance the value of data. Need needs to be loved.
If you want to use the community, you have to respect the community. Remember the CDDB? Bits of freedom was taken from the community, until it broke apart. No matter how big you get, the community that built it can turn back and destroy it if you donâ€™t treat them kindly back.
Free data is fine, but communities make it way better.