3 Business Models using City Open Data

Civic APIs are in the spotlight across the two days of API Strategy and Practice being held in Amsterdam. Workshops, several panel sessions, keynote speakers, and fireside chats are all focused directly on how cities are opening up their data and introducing APIs into the ways they work with citizens and local businesses. Even discussions of the Internet of Things or realtime data are expected to reference the progress being made by cities to become smarter by using APIs.

Key open data leaders around the world — like Cathrine Lippert from the Danish Agency for Digitization — are choosing to focus on opening local government data as a priority: “That is the greatest potential right now. Creating local solutions and locally-based products out of open data is much more realistic,” she recently shared as part of a discussion with Nordic APIs.

With a focus on realistic local solutions, initiatives like the CitySDK project are working with pilot cities to create uniform APIs that have standard approaches to how APIs expose local government data. The hope is that this will better enable developers to create commercial applications, who will then be able to replicate their solutions across multiple cities.

In a panel session today describing the progress being made by some civic stakeholders — including a developer team that Builds commercial app solutions and enters civic hackathons, an open transport advocate who has built a data Platform for smart cities, and a not-for-profit data platform, amongst others — a key question kept emerging: “Where is the money?”

Here are three ideas from panelists as to how independent developers and small teams can create commercial opportunities out of city-level open data.

1. Pieter Colpaert: “Offer Service Level Agreements”

Pieter Colpaert suggests looking into the monetization success that has revolved around the open source, open data platform he helped create: The Data Tank. He provides Service Level Agreements to paid customers for a more consistent service component. While anyone is free to use the platform, for those businesses or city government agencies that would like to ensure a consistency in the availability of support services for the platform (instead of just relying on the open source tools provided), The Data Tank offers Service Level Agreements. Colpaert argues that this is a viable model for developers to consider, one that offers “the enrichment of open data, then exposes it through an interface, and then sells that to business”.

2. Lex Slaghuis: “Sell back to government”

Lex Slaghuis is CTO at Open State, an agency that advocates for transparent democracy. He makes it clear that even not-for-profits need a viable business model in order to build products from open data. They have a benchmarking tool that draws in spending data from various Dutch government agencies, aggregates the data sources and makes them available via API. They then use their API to create a benchmarking tool to allow the City of Amsterdam to compare their spending with other governments across the country. Open State have been lucky enough to have received all the funding needed to provide the tool from the City of Amsterdam, but you can imagine other business models that would be based on more of a subscription service model, so that each city that wanted access to the benchmarking tool could pay an access fee.

3. Jonathan Carter: “There is a new way of making money”

Echoing an element of the business model being used by MapBox, Co-founder of developer shop Glimworm IT BV, Jonathan Carter, found creating solutions with open data has opened a new channel for customer reach and government contracts.

“There is a new way of making money and it is in this loop: becoming a provider for the city,” Carter said. “By opening the data, cities are letting the market create things, for example, in hackathons and competitions, and then cities can cherry pick the best ideas and buy them back. It is a really efficient route for cities, it enables agile development.”

Carter gives a number of business growth examples, all that sprang up from building a parking app using the city’s open data. Along the way, using the city’s data sets to make a parking data API out of the sources drew the attention of new corporate customers who contracted Glimworm for their projects. Over time, they also won prize money in several hackathons from the API and subsequent apps built with their API and eventually became the official city supplier for the Parking API.

When ProgrammableWeb readers think of viable business models with open data, they often think of bigger players like Enigma in the US that are looking at building commercially viable open data platforms, Riskpulse that grew out of using weather data, or MapBox that now has a global reach that has successfully commercialized the remixing of open source localization data.

But what the panel members demonstrated is that for independent developers and small developer shops, there are a wealth of opportunities where open data can be leveraged to provide a new set of contract opportunities and revenue streams, while affording a greater sense of satisfaction by involving developers in solving real city problems.

By Mark Boyd. Mark is a freelance writer focusing on how we use technology to connect and interact. He writes regularly about API business models, open data, smart cities, Quantified Self and e-commerce. He can be contacted via email, on Twitter, or on Google+.

Be sure to read the next Government article: Seven Key Messages From Nordic APIs that Got Developers Talking