The Economics of Data Businesses
When you think of tech, you would think of SaaS, marketplaces, e-commerce, social media etc. Most of these business models have been studied extensively but not data businesses.
Abraham Thomas wrote a great piece on the ins and outs of data businesses. Let's dig in!
What is a data business?
- A company is a data business if, and only if, data is its core product
- Data is central to the activity of the company; without the data, there is no company
- Google and Bloomberg are all data businesses. They acquire their data in different ways and generate revenue from that data in different ways
It's all about the data
- Succesful data businesses are all built around a unique or proprietary data asset
- There are a few ways to build it: brute force, aggregate and harmonize, license and transform, affiliate collection, core business output, payment in kind, inbound network effects, give to get etc.
- For example, Google uses brute force to build their data asset. They allocate resources for the task of data collection and crawl every website on the internet