The Ins And Outs Of A Data Marketplace

Chief Data & AI strategist, Principal at Perficient.

In the recent Data & Analytics Summit organized by CIO.com, the emphasis on data as a valuable asset by many leaders across the globe clearly proves the point that companies are looking into new revenue opportunities to monetize data. Doug Laney pointed out in a Forbes article that there are several ways to monetize data, including digital products and services, licensing data, inverted data monetization and trading with data. Industry leaders across healthcare, financial services, retail, manufacturing and many more have been prioritizing data as an organizational asset and have been thinking about the right quality data, at the right level, to the right people, at the right time, for the right decisions.

A data marketplace is an architecture in which data sharing and data monetization are enabled. According to the Cloud data warehouse company Snowflake, “A data marketplace is an online transactional location or store that facilitates the buying and selling of data.” This is driven by the increasing speed of volume, variety and velocity of big data as first-party data within an organization or third-party data such as Google Analytics. A data marketplace can also be an internal-facing platform supporting business process optimization and new revenue opportunities by saving money.

Here are some statistics revealing the economic motivation behind data marketplaces:

• IDC estimates that by 2022, the revenue of big data and analytics will reach $274 billion worldwide.

• Accenture research estimates that by 2030, over 1 million organizations worldwide shall monetize their data assets, unlocking more than $3.6 trillion in value.

Consider this example. Mayo clinic created a massive digital health patient data marketplace called the Clinical Data Analytics platform. This platform includes details about patients, including disease patterns, diagnosis, digital tracing and any complications during a treatment and their corresponding care plan. With appropriate security and compliance in place, Mayo clinic has had many healthcare organizations, payers, providers and life science companies alike gain access to de-identified patient data using this marketplace approach, through appropriate licensing deals in efforts to do new drug discovery, understanding treatment patterns for specific therapeutic areas and save lives.

Here are some key considerations of a data marketplace:

A data marketplace is built within an organization using a variety of data products or data as a service (DaaS), including queries (typically SQL), reports, data services, application programming interfaces (API), machine learning models and physical or virtual views, among others. Appropriate pricing and incentive models are created by data providers.

Interoperability is a key function of the data marketplace that is enabled by an API — which, in addition to lightweight data sharing between data producers and consumers, will offer up business models such as crowdsourcing and cross-industry use cases.

An organization building a data marketplace should consider their role as a data provider. McKinsey has a good article that can provide additional details on the types of data marketplace providers and their functions.

Key features that enable a data marketplace include data lineage, a smart data catalog to define the meaning of critical data elements, an AI-driven metadata engine, data products using APIs, data quality scorecards, information security and a robust yet agile data governance with well-defined policies and procedures.

A data marketplace can also be an internal-facing tool serving analytic use cases such as customer segmentation, data quality scorecards that track the quality of an internal system in dimensions, such as completeness and accuracy, and a data catalog that can effectively serve as a “Google” for the enterprise to search and discover enterprise data assets.

Here are some examples of data marketplaces:

• Certified and governed open data marketplaces from the United States government such as OECD and Data.gov and open financial datasets by World Bank.

• International data marketplaces such as Nikkei Asia.

• Niche data marketplaces such as geospatial or consumer identity vendors.

• The Google data marketplace offered in Google Big query that’s licensed by Google data partners such as Dow Jones, AccuWeather and Xignite.

• The Snowflake data marketplace.

• The Adobe data marketplace.

Here are some next steps for an organization looking to get started with a data marketplace:

1. Identify the data value you provide with your first-party data and the category of data marketplace provider you want to play (raw data provider, data aggregator, platform provider, etc.).

2. Identify two main categories or personas that will support the data marketplace, including data consumers who will use the data and data partners who will enrich the data.

3. Create a reference architecture for the data platform enabling the data marketplace, appropriate control planes and data governance, and the technologies that will enable the marketplace.

4. Put the appropriate licensing models and contracts in place before exposing the data to consumers.

5. Build the data marketplace components, including data collection, data curation, data governance, APIs serving as data products and appropriate levels of data security and compliance.

6. Build ongoing functions to monitor, measure and continuously improve data products and features.

According to Forbes Senior Contributor Gil Press, the previous decade saw growth of almost 5,000% in “the amount of data created, captured, copied, and consumed in the world.” Organizations are noticing that data is a key asset that can generate revenue, optimize business process and innovate digital products. My recommendation is for businesses to consider assessing this need and identify how to enhance their existing architecture to establish a data marketplace.

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What is a data marketplace?

Another security aspect which data marketplaces support is financial. Data marketplaces facilitate high-ticket data exchanges over a secure platform. Commercial datasets can cost $100,000s, so it’s easy to understand why businesses are cautious when it comes to paying for data from a source they haven’t used before. Data marketplaces bring trust to these transactions. They allow authentic buyers to connect with authentic providers and sign data sourcing agreements in confidence. ‍Accessing commercial datasets has remained notoriously difficult, with 50% of firms saying they encounter challenges when it comes to sourcing reliable and accurate data which fits their use case (Pitney Bowes). Data marketplaces remove the effort of finding the right data provider and bring transparency to the external data industry. They power trustworthy and efficient data commerce. ‍How exactly do they do this? What does ‘shopping for data’ on a data commerce platform look like?

How do data marketplaces work?

On a basic level, data marketplaces work just like any other online market or ecommerce platform! Except on data marketplaces, instead of the product being a coat or a subscription to a movie streaming service, the product the buyer is buying on data marketplaces is data. Otherwise, most data marketplaces deliberately replicate the same shopping experience which you’d encounter on a retail website or movie streaming platform. This experience can be broken into 5 basic stages: Browse, Compare, Sample, Purchase, Review.

Browse Data

The natural next step after comparison: try before you buy. Once a buyer has refined their search to one or two data provider candidates, in the majority of cases, they request a data sample from these candidates. ‍Before committing to a data purchase, it’s vital that buyers make sure that the external data they’re interested in works for their use case. This means that it must contain exactly the insights which will enable them to make data-driven decisions. Also, the external data must integrate with their organization’s internal systems and software. With a data sample, analysts and data scientists can run tests to ensure that the dataset, data service, or API is suitable. ‍Data marketplaces make it easy to arrange sample sharing. Different features are available to make it as easy as possible to get a data sample and streamline the data sourcing process. Some data marketplaces offer instant sample downloads in CSV format. Others support on-platform communication between buyer and provider, so they can arrange the logistics of supplying data samples to the buyer quickly and securely.

Purchase Data

Once a data buyer is happy that the data sample fits with their organization’s software systems and that it will work for their use case, they can purchase the data. Commercial data is available in multiple different formats depending on the individual provider – some offer APIs, others offer databases in bulk via S3 drops, and others still provide constant data streams and feeds. We’ll look closer at the different formats and delivery options for external data later on. ‍What matters here is that the data is purchased from a vendor via the data marketplace. Typically, the data marketplace charges a commission fee for the service of connecting the provider to the buyer. There are also several possible payment options when buying external data:‍

• One-off data purchase: The buyer pays for a single dataset or database at a fixed price. This one-off transaction doesn’t guarantee any rights to updates to the dataset-
• Ongoing data subscription: The buyer can access the data on a fixed-term subscription basis which is renewed periodically (usually every month or year).
• Usage-based data license: An on-going agreement between the buyer and the provider where the buyer pays for the data as and when they need it. Sometimes data providers ask for a minimum monthly usage guarantee.

Obviously, the legal nitty-gritty at the ‘purchase’ stage of the data shopping journey is important, especially for big deals and high-ticket data exchanges. Again, data marketplaces can help here. To ensure the data deal closes smoothly, data marketplaces offer support to both parties to finalize the transaction and sign data contracts. This is especially helpful for first-time data buyers, and for companies who haven’t monetized their data before. Other times there can be logistical issues, which data marketplaces, as global platforms with lots of experience, are able to resolve. For example, if the two companies use different currencies. Data marketplaces continue to offer independent advice throughout the data commerce experience to ensure both data buyer and seller are satisfied.

Review Data

Data marketplaces can be split into three broad types, based on who they’re designed for and where the data is sourced from.

Personal Data Marketplaces

B2B (or ‘business-to-business’) data marketplaces are for data which is traded between businesses and organizations. Individuals sign up to the platform on behalf of the company they own or work for. B2B data marketplaces make up the majority of data marketplaces. Which makes sense: typically, it’s not individuals who want to buy data, but businesses. And Big Data collection is rarely done on an individual level, but by companies with lots of storage space in their technology stack. It’s these companies who want to monetize their data at scale because they have the supply to make it commercially-viable. ‍Here’s where B2B data marketplaces come in. They enable companies to meet their business and operational targets by making it easy to buy and sell data. The range of B2B marketplaces available all offer different specific advantages and services to businesses, which we’ll look at in more detail soon. Generally speaking, B2B data marketplaces are a demand generation platform for commercial data providers and SasS vendors. Data providers choose data marketplaces where it’s easy for them to integrate their data, or which require no integration at all. B2B data marketplaces operate according to various business models: sometimes providers have to subscribe and pay to list their data, others offer a free route for data monetization, where the vendor only pays when they sell their data successfully. ‍From the buy-side, businesses opt to source their data from B2B platforms over open-source alternatives because B2B marketplaces primarily offer analytics-grade data. These powerful datasets and APIs give companies the access to insights which their competitors likely won’t have, because they’re only available to purchase. For this reason, commercial datasets and APIs listed on a B2B data marketplace can be worth a lot of money. B2B buyers rely on business data marketplaces to help them source the right data for the right price.‍Examples of B2B data marketplaces include, Datarade, Snowflake, AWS, Axon, Eagle Alpha, and Oracle.

IoT Data Marketplaces

We’ve already looked at what the IoT is – a network of devices which constantly emit sensors and generate data. An IoT data marketplace is a platform for buying and selling the intelligence produced by the IoT. The data available to buy from an IoT marketplace is sourced exclusively from this web of interconnected devices, giving buyers real-time signals from millions of digital touchpoints.‍IoT data marketplaces are created with the aim of unifying the streams of information being produced on a global scale all the time. When harnessed and structured, these data streams can yield significant insights into consumer behavior, online trends, and technological developments. IoT marketplaces are typically very accessible, with flexible pricing options like ‘pay-per-hour’, in line with the open network which this kind of data marketplace supports.‍Monetizing data via an IoT data marketplace is an attractive option for many businesses. As companies increase the volume and quality of hardware in their technology stack, more and more data is being produced as a by-product. These by-products, the ‘digital twins’ we discussed earlier, are a valuable data asset. By listing IoT-sourced data, companies can tap into a simple stream of revenue by utilizing the products they already use. ‍Examples of IoT data marketplaces include IOTA Data Market and Streamr. That’s the 3 kinds of data marketplace covered. What about other platforms designed for data exchange? Let’s see how they weigh up to the data marketplace model as a solution for providers and buyers.

What are other data exchange platforms?

Welcome to Datarade’s 2021 edition of ‘what’s the difference between’. There are lots of different sites and services which aim to make buying and selling Data Capital more rewarding. Each is slightly different to a data marketplace, and each has its pros and cons:

What’s the difference between a data marketplace and a data streaming platform?

Data lakes are huge repositories of data gathered using IoT and machine signals, proprietary company data, records, and CRM databases. The trouble with data lakes is that, although the volume of data they offer is vast, it can often take so much time and effort to differentiate the valuable data from the irrelevant that it ends up costing companies time and money instead of saving. Identifying and analysing data from data lakes is also a complex task which requires experienced data analytics and science.

In comparison, data marketplaces are designed for the everyman. Businesses of all sizes and with any level of experience can use data marketplaces for rewarding and efficient data shopping experiences. And increasingly, data marketplaces are offering datasets and APIs just as granular and powerful as the information kept in a data lake, but that are actionable without having to undergo complex structuring and cleansing before they can be analyzed.

What’s the difference between a data marketplace and a data silo?

Like with data streaming platforms, however, data clouds can present integration challenges. As the data exchange industry develops, data clouds and streaming sites are working hard to rectify this and make it as painless as possible to add Big Data to their platforms to start monetizing it. At the moment, however, SaaS vendors and data providers are still reporting integration issues with these sites. Data marketplaces don’t require any integration. So companies of any size and SaaS experience can set up their data storefront on data marketplaces like Datarade and begin selling their data instantly and securely.

Examples of data clouds include Snowflake and AWS Data Exchange.

Let’s now look at the two sides of the data marketplace in more detail. First: sell-side. Why do data vendors sell their data via data marketplaces? To understand this, we first need to understand data monetization.

What is data monetization?

Data monetization is a way of companies increasing their revenue by selling their intangible data assets. The fastest-growing companies have adopted a data monetization strategy and are reaping the commercial benefits (McKinsey & Co.). ‍For the most successful data monetization initiatives, organizations first have to define the value of their in-house data. What kind of data is it? What insights does the database yield? Who would buy the data? How much would they pay for it? Once these questions have been answered by conducting competitive market research, the next step in data monetization is for companies to select the right data monetization platform. Studies show that companies which take advantage of next-generation data marketplaces will gain a competitive digital edge (Pitney Bowes), because data marketplaces are increasingly being considered the best demand generation platform and the easiest route into data commercialization.

How do data marketplaces enable data monetization?

For companies looking to launch their data monetization strategy, data markeptlaces offer a number of unique advantages:

Data marketplaces offer unrivalled demand generation potential. They attract data buyers from all over the world, working for the most valuable global companies. For SaaS data vendors, this means the opportunity to tap into a new lead pool which includes some of the world’s largest corporates, brands, and financial institutions.

No integration, more autonomy

When they join a data marketplace, data providers can continue to sell their data in the way that suits them. Data marketplaces don’t require complex integration or third-party brokers, meaning data vendors can keep their data monetization strategy in place, but with the added visibility and lead generation potential which a data marketplace provides.

Small companies grow with smart data monetization

Data marketplaces welcome all kinds of data providers, from established SaaS companies, to startups looking to use their data as a new revenue source. As independent platforms, data marketplaces are ‘vendor agnostic’. As long as providers meet the data marketplace’s relevant security measures, they can list their data.

Which companies are selling on data marketplaces?

There are thousands of data providers in the external data market. Some data providers, like Lifesight, are businesses where the primary product and service is to provide a data sourcing solution. Others have other primary business focusses, like Nikkei, a news outlet for Japanese financial markets. Both companies use data marketplaces like Datarade to monetize their data, showcase their datasets, and reach clients around the world. Whether your business is specifically a SaaS company, or you have in-house data to commercialize, discover how you can list your data on Datarade’s data marketplace.‍So that’s what data marketplaces bring to the sell-side. Now let’s see what they offer data buyers.

How to buy data from a data marketplace?

The first question to answer here: why buy external data in the first place?

Why do businesses buy external data?

Data sourcing is the process of researching, sampling, testing, and finally buying data. It usually refers to external data acquisition, where companies (and sometimes individuals) source data from outside of their proprietary databases and records. Data sourcing can require a lot of time and research, because it’s crucial that data buyers invest in exactly the right data for their use case, and that they acquire this data at the right price. Otherwise, from an ROI perspective, they could end up buying data which doesn’t contribute to their strategies and success. Either because the insights in the dataset aren’t suited to the buyer, or because the data sourcing cost too much time (and money!).

What do these data products actually look like? And how does the buyer access them?

How to get data from a data marketplace?

Data from a data marketplace is available to buy in different formats. Depending on when the buyer needs the data and the data management system they use, vendors can tailor the delivery format and availability to the buyer. Data exchange via a B2B data marketplace usually occurs via two delivery methods:

‍This brings us to the final part of the Ultimate Guide to Data Marketplaces 2023: the kinds of data you can buy from them.

What kind of data is available on a business data marketplace?

B2B Data Marketplaces collect and storage B2B and company data from a multitude of data providers onto one platform. They enable data buyers to access an aggregate of pre curated information from multiple sources that can be used for marketing, sales, and BI purposes.

Explore the selection of business data marketplaces we have complied in order to compare and find the suitable platform for your needs.

OpenPrise Data Marketplace

Crunchbase Marketplace

Democratizing the way innovators find opportunity.

Dataguru

Dataguru.in is a platform in the B2B Data Marketplaces & Audience Data Marketplaces area. They are headquartered in India.

The DX Network

The DX Network is a platform in the B2B Data Marketplaces & Decentralized Data Platforms area. They are headquartered in Estonia.

Informatica B2B Data Exchange

TruSet

TruSet is a platform in the B2B Data Marketplaces & Decentralized Data Platforms area. They are headquartered in United States of America.

LemoChain

LemoChain is a platform in the B2B Data Marketplaces & Decentralized Data Platforms area. They are headquartered in Singapore.

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One of the best things to sell today is your data. Modern data marketplaces are taking off, allowing not only large enterprises but also individuals to monetize their data. If you want to know why data marketplaces are going to hit the jackpot in the next decade, how they work, and what their revenue streams are, then keep on reading.