How Cities Can Help Local Institutions Monetize Their Data
With a new online marketplace, Copenhagen is trying to enable an 'access economy'
Beyond its promise of transparency and accountability, open data has become a hallmark of good government because of its well documented return on investment for the public. In New York, where I work on implementing the city's vision of "Open Data for All", it is proving to be valuable information resource helping local small businesses compete with large companies.
Government data is an asset whose value otherwise is capped at the operational value it produces internally. Opening it to the public redeploys this asset to encourage entrepreneurialism and innovation outside the four corners of city hall. Recently, the city of Copenhagen used the same logic to drive the value proposition of its open data program to the next level. The city is moving beyond simply making government-collected data available toward spurring the Danish capital's residents, businesses and universities to monetize their own latent information assets.
The Copenhagen Solutions Lab (CSL), which oversees the city's open data project, invested last year in the "City Data Exchange," an online data marketplace modeled after the city's open data portal. In 2014, the city issued an RFP offering $1.2 million in development capital for a vendor to create a sustainable business model for the online marketplace. Hitachi, a Japan-based technology company, had the winning bid, and the Data Exchange launched last May.
Selling one company's data to another is no new phenomenon; third-party data brokers have thrived for decades. Copenhagen's Data Exchange, however, is unique in making these transactions transparent and centralized around the inherently "local" space of a specific city. In the RFP, CSL articulated a clear set of expectations for the project -- namely, that the winning bid needed to cater to the unique needs of Copenhagen's startups and academic researchers in addition to more established industry data consumers.
As this project unfolds, it will test how successfully a public institution can draw on third-party vendors like Hitachi to amplify the data-analytics potential of local organizations while advancing other city responsibilities, such as ensuring equity and privacy protections. But while it is still too early to tell whether the City Data Exchange can be called a success -- to date, it contains only 2 gigabytes of data -- it certainly presents a promising model for spurring third-party innovation by leveraging an existing public-sector asset -- in this case, the infrastructure of open data.
We've certainly seen how this can work in the evolution of the sharing economy. Companies like Uber and Airbnb are successful not because the product or service itself is radical but because they build on ubiquitous technological infrastructure to configure new and scalable ways of accessing and monetizing familiar things. Uber leverages existing road infrastructure and vehicles to give prospective riders an efficient way to access rides. Airbnb locates it business model in making homeowners' idle spaces rentable to outsiders. As a recent article in the Harvard Business Review put it, "The sharing economy isn't really a 'sharing' economy at all; it's an access economy."
What Copenhagen is pioneering amounts to an effort to enable that access economy in a way that is both efficient and maintains high standards. Creating a "smart" city is more than outfitting roads with sensors and government employees with the latest gadgets. It also means using simple technologies and good policy to create novel ways for local institutions to leverage the public and private assets that can allow them to thrive.