Data monetization, a form of monetization, is generating revenue from available data sources or real time streamed data by instituting the discovery, capture, storage, analysis, dissemination, and use of that data. Said differently, it is the process by which data producers, data aggregators and data consumers, large and small, exchange sell or trade data. Data monetization leverages data generated through business operations as well as data associated with individual actors and with electronic devices and sensors participating in the internet of things. The ubiquity of the internet of things is generating location data and other data from sensors and mobile devices at an ever increasing rate. When this data is collated against traditional databases, the value and utility of both sources of data increases, leading to tremendous potential to mine data for social good, research and discovery, and achievement of business objectives. Closely associated with data monetization are the emerging data as a service models for transactions involving data by the data item.
There are three ethical and regulatory vectors involved in data monetization due to the sometimes conflicting interests of actors involved in the data supply chain. The individual data creator who generates files and records through his own efforts or owns a device such as a sensor or a mobile phone that generates data has a claim to ownership of data. The business entity that generates data in the course of its operations, such as its transactions with financial institutions or risk factors discovered through feedback from customers also has a claim on data captured through their systems and platforms. However, the person that contributed the data may also have a legitimate claim on the data. Internet platforms and service providers, such as Google or Facebook that require a user to forgo some ownership interest in their data in exchange for use of the platform also have a legitimate claim on the data. Thus the practice of data monetization, although common since 2000, is now getting increasing attention from regulators. The European Union and the United States Congress have begun to address these issues. For instance, in the financial services industry, regulations involving data are included in the Gramm–Leach–Bliley Act and Dodd-Frank. Some individual creators of data are shifting to using personal data vaults and implementing vendor relationship management concepts as a reflection of an increasing resistance to their data being federated or aggregated and resold without compensation. Groups such as the Personal Data Ecosystem Consortium, Patient Privacy Rights, and others are also challenging corporate cooptation of data without compensation.
Financial services companies are a relatively good example of an industry focused on generating revenue by leveraging data. Credit card issuers and retail banks use customer transaction data to improve targeting of cross-sell offers. Partners are increasingly promoting merchant based reward programs which leverage a bank’s data and provide discounts to customers at the same time.
- Identification of available data sources – this includes data currently available for monetization as well as other external data sources that may enhance the value of what’s currently available.
- Connect, aggregate, attribute, validate, authenticate, and exchange data - this allows data to be converted directly into actionable or revenue generating insight or services.
- Set terms and prices and facilitate data trading - methods for data vetting, storage, and access. For example, many global corporations have locked and siloed data storage infrastructures, which stymies efficient access to data and cooperative and real time exchange.
- Perform Research and analytics – draw predictive insights from existing data as a basis for using data for to reduce risk, enhance product development or performance, or improve customer experience or business outcomes.
- Action and leveraging – the last phase of monetizing data includes determining alternative or improved datacentric products, ideas, or services. Examples may include real time actionable triggered notifications or enhanced channels such as web or mobile response mechanisms.
Pricing Variables and Factors
A fee for use of a platform to connect buyers and sellers
A fee for use of a platform to configure, organize, and otherwise process data included in a data trade
A fee for connecting or including a device or sensor into a data supply chain
A fee for connecting and credentialing a creator of a data source and a data buyer - often through a federated identity
A fee for connecting a data source to other data sources to be included into a data supply chain
A fee for use of an internet service or other transmission service for uploading and downloading data - sometimes, for an individual, through a personal cloud
A price or exchange or other trade value assigned by a data creator or generator to a data item or a data source
A price or exchange or other trade value offered by a data buyer to a data creator
A price or exchange or other trade value assigned by a data buyer for a data item or a data source formatted according to criteria set by a data buyer
An incremental fee assigned by a data buyer for a data item or a data set scaled to the reputation of the data creator
A fee for use of encrypted keys to achieve secure data transfer
A fee for use of a search algorithm specifically designed to tag data sources that contain data points of value to the data buyer
A fee for linking a data creator or generator to a data collection protocol or form
A fee for server actions - such as a notification - triggered by an update to a data item or data source included into a data supply chain
Improved decision-making that leads to real time crowd sourced research, improved profits, decreased costs, reduced risk and improved compliance
More impactful decisions (e.g., make real time decisions)
More timely (lower latency) decisions (e.g., a vendor making purchase recommendations while the customer is still on the phone or in the store, a customer connecting with multiple vendors to discover a best price, triggered notifications when thresholds are reached for data values )
More granular decisions (e.g., localized pricing decisions at an individual or device or sensor level versus larger aggregates).
There are a wide variety of industries, firms and business models related to data monetization. The following frameworks have been offered to help understand the types of business models that are used:
Doug Laney of Gartner, a leading IT research and advisory firm, has posited a model for a range of data monetization methods:
Indirect Data Monetization
Using data to improve efficiencies
Using data to measurably reduce risks
Using data to develop new products, markets
Using data to build and solidify partner relationships
Publishing Branded indices
Direct Data Monetization
Bartering or trading with information
Information-enhanced products or services
Selling raw data through brokers
Offering data/report subscriptions
He also suggests a set of feasibility tests and questions for any data monetization ideas being considered:
Roger Ehrenberg of IA Ventures, a VC firm that invests in this space has defined three basic types of data product firms:
"
Contributory databases. The magic of these businesses is that a customer provides their own data in exchange for receiving a more robust set of aggregated data back that provides insight into the broader marketplace, or provides a vehicle for expressing a view. Give a little, get a lot back in return – a pretty compelling value proposition, and one that frequently results in a payment from the data contributor in exchange for receiving enriched, aggregated data. Once these contributory databases are developed and customers become reliant on their insights, they become extremely valuable and persistent data assets.
Data processing platforms. These businesses create barriers through a combination of complex data architectures, proprietary algorithms and rich analytics to help customers consume data in whatever form they please. Often these businesses have special relationships with key data providers, that when combined with other data and processed as a whole create valuable differentiation and competitive barriers. Bloomberg is an example of a powerful data processing platform. They pull in data from a wide array of sources (including their own home grown data), integrate it into a unified stream, make it consumable via a dashboard or through an API, and offer a robust analytics suite for a staggering number of use cases. Needless to say, their scale and profitability is the envy of the industry.
Data creation platforms. These businesses solve vexing problems for large numbers of users, and by their nature capture a broad swath of data from their customers. As these data sets grow, they become increasingly valuable in enabling companies to better tailor their products and features, and to target customers with highly contextual and relevant offers. Customers don’t sign up to directly benefit from the data asset; the product is so valuable that they simply want the features offered out-of-the-box. As the product gets better over time, it just cements the lock-in of what is already a successful platform. Mint was an example of this kind of business. People saw value in the core product. But the product continued to get better as more customer data was collected and analyzed. There weren’t network effects, per se, but the sheer scale of the data asset that was created was an essential element of improving the product over time."
Selvanathan and Zuk offer a framework that includes "monetization methods that are outside the bounds of the traditional value capture systems employed by an enterprise... tuned to match the context and consumption models for the target customer." They offer examples of "four distinct approaches: platforms, applications, data-as-a-service, and professional services."
Ethan McCallum and Ken Gleason published an O'Rielly eBook titled Business Models for the Data Economy
Collect/Supply
Store/Host
Filter/Refine
Enhance/Enrich
Simplify Access
Analyze
Obscure
Consult/Advise
Packaging of data (with analytics) to be resold to customers for things such as wallet share, market share and benchmarking
Integration of data (with analytics) into new products as a value-added differentiator such as On-Star for General Motors cars
GPS enabled smartphones
Geolocation-based offers and location discounts, such as those offered by Facebook and Groupon are other prime examples of data monetization leveraging new emerging channels
CRM based ad targeting and media attribution, such as those offered by Circulate
Intellectual property landscape
Some of the patents issued since 2010 by the USPTO for monetizing data generated by individuals include; 8,271,346, 8,612,307, 8,560,464, 8,510,176, and 7,860,760. These are usually in the class 705 related to electronic commerce, data processing, and cost and price determination. Some of these patents use the term, the data supply chain to reflect emerging technology to federate and aggregate data in real time from many individuals and devices linked together through the internet of things. Another emerging term is information banking.
An unexplored but potentially disruptive arena for data monetization is the use of Bitcoin micropayments for data transactions. Because Bitcoins are emerging as competitors with payment services like Visa or PayPal that can readily enable and reduce or eliminate transaction costs, transactions for as little as a single data item can be facilitated. Consumers as well as enterprises who desire to monetize their participation in a data supply chain may soon be able to access social network enabled Bitcoin exchanges and platforms. Clickbait and data hijacking may wither as micropayments for data are ubiquitous and enabled. Potentially, even the current need to build out data broker managed data trading exchanges may be bypassed. Stanley Smith, who introduced the notion of the data supply chain, has said that simple micropayments for data monetization are the key to evolution of ubiquitous implementation of user configurable data supply schemata, enabling data monetization on a universal scale for all data creators, including the burgeoning internet of things.
Presentations and Publications
2016
How CIOs and CDOs Can Use Infonomics to Identify, Justify and Fund Initiatives, Douglas Laney and Michael Smith, Gartner 29 March 2016
Accounting's 21st Century Challenge: How to Value Intangible Assets, WSJ CFO Journal, 22 March 2016
The Rise of Data Capital, Oracle and MIT Technology Review Custom, 2016
Treating Information as an Asset, Christy Pettey, Douglas Laney and Michael M. Moran, Smarter With Gartner, 17 February 2016
German competition watchdog wants 'big data' hoards considered in merger probes, Reuters, 6 Feb 2016
Shift From a Project to an Asset Perspective to Properly Value and Fund IT Investments, Michael Smith and Douglas Laney, Gartner, 16 January 2016
Infonomics and You, Eric Leohner, IRI CoSort, January 2016
The Fair Price to Pay a Spy: An Introduction to the Value of Information, Sebastian Nowozin, Nowozin.net blog, 9 January 2016
2015
Measure Your Information Yield to Maximize Return on Information and Analytics Investments, Frank Buytendijk, Andrew White, Douglas Laney and Thomas W. Oestreich, Gartner, 1 December 2015
IBM Storms Information, IoT Markets by Buying The Weather Company, Douglas Laney, Gartner, 4 November 2015
How to Adopt Open Data for Business Data and Analytics — And Why You Should, Alan D. Duncan & Douglas Laney, Gartner, 28 October 2015
Seven Steps to Monetizing Your Information Assets, Douglas Laney, Gartner, 15 October 2015
Why and How to Value Your Information as an Asset Heather Levy & Douglas Laney, Smarter With Gartner blog, 3 September 2015
Hackers Know the Value of Health Information, So Why Don't HDOs Appreciate Healthcare Infonomics?, Laura Craft & Douglas Laney, Gartner, 5 August 2015
In August 20, 2015 Gartner Analyst Doug Laney gave a publicly-available webinar (with replay available) on Methods for Monetizing Your Data. This is a reprise of the presentation he has given at various Gartner summits and symposia around the world.
Hackers Know the Value of Health Information, So Why Don't HDOs Appreciate Healthcare Infonomics?, Laura Craft & Douglas Laney, Gartner, 5 August 2015
Why and How to Measure the Value of Your Information Assets, Douglas Laney, Gartner, 5 August 2015
Applied Infonomics: Measuring the Economic Value of Information Assets, MIT Chief Data Officer Symposium, Doug Laney, Gartner, 22 July 2015
Data and Analytics: A New Driver of Performance and Valuation, Institutional Investor Research and KPMG, 28 June 2015
The Convergence of Information Economics and Economic Information Corp Development Summit presentation replay, Doug Laney, Gartner, 1 July 2015
Data = Opportunity: But Are You Monetizing Information? Smart Data Collective, RK Paleru, 28 May 2015
Keeping Busy with Data Strategy, Gartner Blog Network, Doug Laney, 26 May 2015
Dollar Value of Data: RadioShack, Other Bankrupt Firms Auction Customer Data to Pay Debt, Wall Street Journal, Kim Nash, 20 May 2015
The Benefits and Risks of Using Open Data, Doug Laney, Gartner, 8 April 2015
Consider this: Does all data have value? Good Strategy blog, Martyn Jones, 30 January 2015
The Theory of Infonomics: Valuating Corporate Information Assets - white paper, RSD, January 2015
Customer data is a valuable asset. Why not treat it that way?, F.Business, Ajay Kelkar, 14 January 2015
The Rise of Data Capital (video), Oracle, 8 January 2015
2014
Quantifying the Value of Your Data, CMS Wire, Bassam Zarkout, 30 September 2014
What is Infonomics?, Ed Hallock, RSD blog, 9 September 2014
Cashing In on Your Data, MIT Sloan Center for Information Systems Research, Barbara H. Wixom, Volume XIV, Number 8, August 2014
Increase the Return on Your Information Investments With the Information Yield Curve, Gartner, Andrew White and Douglas Laney, 31 July 2014
The Hidden Shareholder Boost from Information Assets, Forbes, Doug Laney, 21 July 2014
CIO Decisions: The new infonomics reality: Determining the value of data, TechTarget SearchCIO, June 2014
Putting a price on information: The nascent field of infonomics, TechTarget SearchCIO, Linda Tucci, 13 May 2014
Six ways to measure the value of your information assets, TechTarget SearchCIO, Nicole Laskowski, 13 May 2014
Infonomics treats data as a business asset, TechTarget SearchCIO, Nicole Laskowski, 13 May 2014
The economics of information management, PVTL Blog, Felix Barbalet, 13 April 2014
The Hidden Tax Advantage of Monetizing Your Data, Forbes, Doug Laney, 27 March 2014
The Chief Data Officer – Managing the Value of Data, Teradata ANZ Blog, Renato Manongdo, March 2014
How Organizations Can Monetize Customer Data, Gartner, Olive Huang, Doug Laney, 6 March 2014
Improving the Value of Customer Data Through Applied Infonomics, Gartner Research Publication, Douglas Laney, Olive Huang, 6 March 2014
Information Value Accrual and Its Asymmetry, Gartner Blog Network, Andrew White, 14 February 2014
Does Information Utility Suffer a Half Life?, Gartner Blog Network, Andrew White, 29 January 2014
2013
What is the "Information" in "Information Governance"?, RSD Blog, James Amsler, 30 December 2013
To Twitter You're Worth $101.70 Gartner Blog Network, by Douglas Laney, 12 November 2013
Treat data like money. CMO's Advice: Marketers must develop an investment strategy for data, The Economist Group, Jim Davis, SVP & CMO, SAS, October 2013
Infonomics: The New Economics of Information, The Financial Times, Doug Laney, VP Research, Gartner, September 2013
Value of Information, GigaOM presentation by Dave McCrory, SVP at Warner Music Group, July 2013
Accounting for the value of (big) data, Banking Technology Magazine, David Bannister, 11 June 2013
Putting a price on information: The nascent field of infonomics, SearchCIO Journal, Linda Tucci, May 2013
On March 19, 2013 the Chicago Chapter of the Product Development and Management Association (PDMA) held an event titled "Monetizing Data: An Evening with Eight of Chicago's Data Product Management Leaders"
2012
What's Your Big Data Worth, InformationWeek, Ellis Booker, 17 December 2012
Future of Money: Infonomics Monetizing Value in Big Data Information Assets, Mary Knox, Gartner, 14 December 2012
An Introduction to Infonomics, InformationAge, Pete Swabey, 26 November 2012
The Birth of Infonomics: the New Economics of Information, Gartner research publication, Douglas Laney, 3 October 2012 (public summary, full text available to Gartner clients)
Tobin’s Q & A: Evidence of Information’s Real Market Value, Gartner Blog Network, Douglas Laney, 14 Aug 2012
Extracting Value from Information, Financial Times, interview with Douglas Laney by Paul Taylor, 25 May 2012 (free registration required)
Infonomics: The Practice of Information Economics, Forbes, by Douglas Laney, 22 May 2012
To Facebook You're Worth $80.95, Wall Street Journal, by Douglas Laney, 3 May 2012
Introducing Infonomics: Valuing Information as a Corporate Asset, Gartner research publication, Douglas Laney, 21 March 2012 (public summary, full text available to Gartner clients)
Barriers to the Effective Deployment of Information Assets: An Executive Management Perspective, Interdisciplinary Journal of Information, Knowledge, and Management, Nina Evans and James Price, Volume 7, 2012
Older
What is Enterprise Information Management (EIM) by John Ladley, Morgan Kaufmann, 2010
Data as an Asset blog series by John Schmidt, 2010
Information Driven Business: How to Manage Data and Information for Maximum Advantage by Rob Hillard, Wiley 2010
How to Measure Anything: Finding the Value of Intangibles in Business by Douglas W. Hubbard, Wiley 2010
Intangible Assets: Valuation and Economic Benefit by Jeffrey A. Cohen, Wiley 2005
Value Driven Intellectual Capital: How to Convert Intangible Corporate Assets Into Market Value by Patrick H. Sullivan, Wiley, 2000
Bank of America Case Study: The Information Currency Advantage, Teradata, Felipe Carino and Mark Jahnke, Proceedings of the 24th VLDB Conference, New York, NY, 1998
Information Payoff: The Transformation of Work in the Electronic Age by Paul A. Strassmann, The Free Press, 1985
