Open data businesses - an oxymoron or a new model?

Written by
  • Mor Rubinstein
  • Christian Villum

Building a business based on open data may seem counterintuitive, but new models are emerging with greater frequency and demonstrating how to integrate open data into a business operation in a useful and profitable manner. Identifying the type of open data that can help a business grow involves not only understanding what open data is, but also creative thinking around what can be done with the data. Once a useful data source is identified, a business owner must assess the risks and decide how to integrate the data into their product. While the first part of open data use relies only on a business discovering a viable application for the data, the second part is dependent completely on the data publisher and can hinder business opportunities if the data is not delivered regularly and in a consistent format. This article explores the challenges faced by a couple emergent businesses using open data in their products.

Most business that use open data use it in order to enrich an existing product. Google, for example, uses open transport data in a GTFS (General Transit Feed Specification) format to enrich their Google Maps applications and to allow users to plan their trip using public transport. Yelp, an application that connects people to restaurants and business, uses municipal health inspection data to inform users about the hygienic quality of a restaurant (for more examples to how open data can help to enrich mobile applications, see Gov500). Properati, a start-up company based in Buenos Aires, Argentina, uses open data not only to enrich their application and allow a better user experience for their users, but also to attract new clients. Open data therefore, can create business leads if it is used creatively.

Properati offers an innovative method to sell real estate in the digital era. Currently, most Argentinian real estate websites are owned by newspapers and use the same old model: they sell ads about specific real estate to home owners and agencies. Properati however, allows clients to publish home listings for free and pay only for the amount of applications (or leads) they get. The listing therefore are always up-to-date as opposed to the previous model where the listings was bought according to a time-slot and could still be advertised even if the offer no longer exists.

Properati uses open data to enrich their services and to allow the buyers to find their house of their dreams (or at least as close as they can get to it). In the case of Buenos Aires, through the use of public open data, users can find out if the property they are interested in is close to a public school and transport and how it compares to prices of similar properties in the area.

However, this new model created a big challenge for Properati. Their main competitor is newspapers and old media conglomerates, who do not have any interest in promoting Properati and selling them advertising services. Therefore Properati had to find alternative ways to attract clients. One of the ways they did that was to create mini-applications which are able to grab users’ attention and direct them to the site. These applications were based on problems their users had encountered and data that they could find on the Buenos Aires open data portal.

One of these successful mini-apps was based on the Buenos Aires tree census. The map visualizes the location of trees that cause allergies (by releasing lots of pollens) in the streets of Buenos Aires. The map helps pedestrians and cyclist to plan their journey so they could avoid the pollens and allows future home buyers to learn about the pollen-causing tress and vegetation in their area.

Properati founder, Martin Sarsale, is also one of the founders of the civic tech scene of Buenos Aires. As an activist and a business owner, he understands the importance of open data and how it can contribute to business development. As part of the company policies, Properati release their own open datasets online to allow others to create additional economic value from that data. However, most business entrepreneurs do not have the same knowledge and experience Martin has had with open data, and therefore do not know how to make use of it and may be unwilling to take on these perceived risks.

Properati is now expanding into other markets in Latin America. Their challenge is to obtain datasets from other municipalities in order to replicate the success of the application based on the Buenos Aires tree census. This example shows that different datasets can be used in innovative ways to attract customers, and that governments should release data and promote it within the business sector in order to stimulate more use of it.

Another organisation that uses open data with great success is Mapbox, a developer-focused mapping platform that powers thousands of applications and websites, with customizable and scalable maps, analysis, and data. Mapbox is an open source company. They build their product with open source components, work in the open, and release as much code as possible. Right now they have over 350 public repositories on Github, mostly licensed under BSD. They do this, they say, because they believe that it’s the right thing for people, technology, and business.

Moreover, the vast majority of Mapbox’s data is in the open. Large sources include OpenStreetMap, USGS, Landsat, Natural Earth, and OpenAddresses. They contribute to these sources, participate in their communities, and invest in tools that help improve them. However, they also work extensively with proprietary sets of data that they buy, They legally cannot open these. Nor do they release heavily processed data. Processing data and delivering the final products has obvious and real costs: server infrastructure and bandwidth, as well as labour costs. Their ability to distill meaning out of raw material is a core part of their product.

One of the concrete projects that Mapbox is working on is, a free and open world-wide address dataset. Historically, address data has been difficult to obtain. At best, it was sold for large amounts of money by a small set of ever-more consolidated vendors. These were often the product of public-private partnerships set up decades ago, under which governments granted exclusive franchises before the digital era unveiled the full importance of the data. In some cases, data exclusivity means that the data simply isn’t available at any price. Fortunately, the situation is improving. Scores of governments are beginning to recognize that address data is an important part of their open data policy. This is thanks in no small part to the community of advocates working on the issue. While initiated by Mapbox, is fuelled by a global community collecting openly available address data. Recently they celebrated their 100 millionth address point.

Whereas Mapbox and OpenAddresses help people navigate with convenience,, another open data-driven company, helps citizens stay informed about the evolution of the places they live in. PlaceILive mines data to provide information about the neighborhood they live in or are going to potentially choose for their future home. Their service lets you view information about safety, transportation, leisure and more on maps with street view and address lists. All the categories are rated and used to estimate Life Quality Index ratings which can give citizens a better insight into different neighbourhoods in their city. The map not only gives them a better background information of various locations to inform decisions to rent, buy, or sell homes, but also helps them find interesting places to visit that they might have missed in their city. In other words, PlaceILive is fostering a new awareness of the environment by providing free information, based on open data, in order to help citizens make informed decisions about finding the best place they can live.

For the moment the company’s work is focused on London, Berlin, Chicago, San Francisco and New York, and they plan to include more than 200 cities over coming months.