Data monetization, a form of

monetization Monetization ( also spelled monetisation) is, broadly speaking, the process of converting something into money. The term has a broad range of uses. In banking, the term refers to the process of converting or establishing something into legal tend ...

, may refer to the act of generating measurable economic benefits from available data sources (analytics). Less commonly, it may also refer to the act of monetizing data services. In the case of analytics, typically, these benefits accrue as revenue or expense savings, but may also include market share or corporate market value gains. Data monetization leverages data generated through business operations, available exogenous data or content, as well as data associated with individual actors such as that collected via electronic devices and sensors participating in the

internet of things The Internet of things (IoT) describes physical objects (or groups of such objects) with sensors, processing ability, software and other technologies that connect and exchange data with other devices and systems over the Internet or other comm ...

. For example, the ubiquity of the

is generating

location data Geographic data and information is defined in the ISO/TC 211 series of standards as data and information having an implicit or explicit association with a location relative to Earth (a geographic location or geographic position). It is also call ...

and other data from sensors and

mobile devices A mobile device (or handheld computer) is a computer small enough to hold and operate in the hand. Mobile devices typically have a flat LCD or OLED screen, a touchscreen interface, and digital or physical buttons. They may also have a physical ...

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 In computing, data as a service, or DaaS, is a term used to describe cloud-based software tools used for working with data, such as managing data in a data warehouse or analyzing data with business intelligence. It is enabled by software as a ser ...

models for transactions involving data by the data item. There are three

ethical Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and wrong behavior".''Internet Encyclopedia of Philosophy'' The field of ethics, along with aesthetics, concerns ma ...

and regulatory vectors involved in data monetization due to the sometimes conflicting interests of actors involved in the

digital supply chain The digital supply chain is a new media term which encompasses the process of the delivery of digital media, be it music or video, by electronic means, from the point of origin (content provider) to destination (consumer). In much the same manner a ...

. 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 In epidemiology, a risk factor or determinant is a variable associated with an increased risk of disease or infection. Due to a lack of harmonization across disciplines, determinant, in its more widely accepted scientific meaning, is often use ...

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 Google LLC () is an American multinational technology company focusing on search engine technology, online advertising, cloud computing, computer software, quantum computing, e-commerce, artificial intelligence, and consumer electronics. ...

Facebook Facebook is an online social media and social networking service owned by American company Meta Platforms. Founded in 2004 by Mark Zuckerberg with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dustin M ...

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 The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...

and the

United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...

have begun to address these issues. For instance, in the financial services industry, regulations involving data are included in the

Gramm–Leach–Bliley Act The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, () is an act of the 106th United States Congress (1999–2001). It repealed part of the Glass–Steagall Act of 1933, removing barriers i ...

and Dodd-Frank. Some individual creators of data are shifting to using personal data vaults and implementing

vendor relationship management Vendor relationship management (VRM) is a category of business activity made possible by software tools that aim to provide customers with both independence from vendors and better means for engaging with vendors. These same tools can also apply to ...

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 Medical privacy or health privacy is the practice of maintaining the security and confidentiality of patient records. It involves both the conversational discretion of health care providers and the security of medical records. The terms can also r ...

rights Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people according to some legal system, social convention, or ethical the ...

, and others are also challenging corporate cooptation of data without compensation.

Financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...

companies are a relatively good example of an industry focused on generating revenue by leveraging data.

Credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...

issuers and retail banks use customer transaction data to improve targeting of

cross-sell Cross-selling is a sales technique involving the selling of an additional product or service to an existing customer. In practice, businesses define cross-selling in many different ways. Elements that might influence the definition might includ ...

offers. Partners are increasingly promoting merchant based

reward programs A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, such programs cover most types of commerce, each having varying features and ...

which leverage a bank’s data and provide discounts to customers at the same time.

Types of Data Monetization

# Internal data monetization - An organization's data is used internally, resulting in economic benefit. This is commonly the case in organizations using

analytics Analytics is the systematic computational analysis of data or statistics. It is used for the discovery, interpretation, and communication of meaningful patterns in data. It also entails applying data patterns toward effective decision-making. It ...

to uncover insights, resulting in improved profit, cost savings or the avoidance of risk. Internal data monetization is currently the most common form of monetization, requiring far fewer security, intellectual property, and legal precautions when compared to other types. The potential economic gains from this type of data monetization are limited by the organization's internal structure and situation. # External data monetization - A person or organization makes data they possess available on a for-fee basis to external parties, or as a broker for same. This type of monetization is less common and requires various methods to distribute the data to potential buyers and consumers. However, the economic gain that results from collecting data, packaging and distributing it, can be quite large.

Steps

# 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 hinders efficient access to data and cooperative and real-time exchange. # Perform

Research Research is "creativity, creative and systematic work undertaken to increase the stock of knowledge". It involves the collection, organization and analysis of evidence to increase understanding of a topic, characterized by a particular att ...

and

– draw predictive insights from existing data as a basis for using data for to reduce

risk In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environme ...

, enhance product development or performance, or improve

customer experience Customer experience (CX) is a totality of cognitive, affective, sensory, and behavioral consumer responses during all stages of the consumption process including pre-purchase, consumption, and post-purchase stages. Pine and Gilmore described the ...

or business outcomes. # Action and leveraging – the last phase of monetizing data includes determining alternative or improved data centric 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 A fee is the price one pays as remuneration for rights or services. Fees usually allow for overhead, wages, costs, and markup. Traditionally, professionals in the United Kingdom (and previously the Republic of Ireland) receive a fee in contra ...

for **use of a platform to connect buyers and sellers ** use of a platform to configure, organize, and otherwise process data included in a data trade ** connecting or including a device or sensor into a data supply chain ** connecting and credentialing a creator of a data source and a data buyer – often through a

federated identity A federated identity in information technology is the means of linking a person's electronic identity and attributes, stored across multiple distinct identity management systems. Federated identity is related to single sign-on (SSO), in which a ...

** connecting a data source to other data sources to be included in a data supply chain ** use of an internet service or other transmission services for uploading and downloading data – sometimes, for an individual, through a

personal cloud A personal cloud is a collection of digital content and services which are accessible from any device. The personal cloud is not a tangible entity. It is a place which gives users the ability to store, synchronize, stream and share content on a r ...

** use of encrypted keys to achieve secure data transfer ** use of a search algorithm specifically designed to tag data sources that contain data points of value to the data buyer ** linking a data creator or generator to a data collection protocol or form ** server actions – such as a notification – triggered by an update to a data item or data source included in a data supply chain * A price or exchange or other

trade value Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct exchan ...

**assigned by a data creator or generator to a data item or a data source **offered by a data buyer to a data creator **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

Benefits

* Improved decision-making that leads to

real time Real-time or real time describes various operations in computing or other processes that must guarantee response times within a specified time (deadline), usually a relatively short time. A real-time process is generally one that happens in defined ...

crowd sourced Crowdsourcing involves a large group of dispersed participants contributing or producing goods or services—including ideas, votes, micro-tasks, and finances—for payment or as volunteers. Contemporary crowdsourcing often involves digita ...

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 the 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). *Targeted Marketing (e.g., Vendors with access to

big data Though used sometimes loosely partly because of a lack of formal definition, the interpretation that seems to best describe Big data is the one associated with large body of information that we could not comprehend when used only in smaller am ...

can make targeted advertisements to specific customers within a set data pool decreasing costs for the advertiser and reaching most interested customers)

Frameworks

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: Roger Ehrenberg of IA Ventures, a

venture capital Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which ha ...

firm that invests in this sector, has defined three basic types of data product firms: 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."

Examples

* Packaging of data (with analytics) to be resold to customers for things such as wallet share,

market share Market share is the percentage of the total revenue or sales in a market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those units would have a ...

and

benchmarking Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time and cost. Benchmarking is used to measure performan ...

* Integration of data (with analytics) into new products as a value-added differentiator such as

On-Star OnStar Corporation is a subsidiary of General Motors that provides subscription-based communications, in-vehicle security, emergency services, turn-by-turn navigation, and remote diagnostics systems throughout the United States, Canada, China, ...

for

General Motors The General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and ...

cars *

GPS The Global Positioning System (GPS), originally Navstar GPS, is a Radionavigation-satellite service, satellite-based radionavigation system owned by the United States government and operated by the United States Space Force. It is one of t ...

enabled

smartphones A smartphone is a portable computer device that combines mobile telephone and computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities and extensive mobile operating systems, which ...

Geolocation Geopositioning, also known as geotracking, geolocalization, geolocating, geolocation, or geoposition fixing, is the process of determining or estimating the geographic position of an object. Geopositioning yields a set of Geographic coordinate s ...

-based offers and location discounts, such as those offered by

and

Groupon Groupon is an American global e-commerce marketplace connecting subscribers with local merchants by offering activities, travel, goods and services in 13 countries. Based in Chicago, Groupon was launched there in November 2008, launching soon af ...

are other prime examples of data monetization leveraging new emerging channels * CRM based ad targeting and media attribution, such as those offered by Circulate *Big Data based

marketing campaign Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to empha ...

s like those offered by Instarea. *Mobile network location data as a trigger for marketing campaigns, like those offered by TASIL &

Omantel Oman Telecommunications Company (Omantel) is the first telecommunications company in Oman and is the primary provider of internet services in the country. The government of Oman owns a 51% share in Omantel. Omantel acquired 65% of WorldCall Pakist ...

Intellectual property landscape

Some of the patents issued since 2010 by the

USPTO The United States Patent and Trademark Office (USPTO) is an agency in the U.S. Department of Commerce that serves as the national patent office and trademark registration authority for the United States. The USPTO's headquarters are in Alexa ...

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 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

. Another emerging term is information banking. An unexplored but potentially disruptive arena for data monetization is the use of

Bitcoin Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...

micropayments A micropayment is a financial transaction involving a very small sum of money and usually one that occurs online. A number of micropayment systems were proposed and developed in the mid-to-late 1990s, all of which were ultimately unsuccessful. A s ...

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 Clickbait is a text or a thumbnail link that is designed to attract attention and to entice users to follow that link and read, view, or listen to the linked piece of online content, being typically deceptive, sensationalized, or otherwise misl ...

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.

References

{{Reflist Data management