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Track E - Robin te Velde


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On the Margin. Pricing of Open Data or the icing on the cake.

On the Margin. Pricing of Open Data or the icing on the cake.

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  • We are caught in the thinking of value chains. This makes the policy debate a simplistic alternation between two radical alternatives: either completely non-commercial (‘Open Data’) or completely commercial (‘PSI reuse’).We should break the chains. Enter the network (or rather, the platform).This is a hybrid solution because in the real (sic!) world government, firms, and citizens are producers and users of data *at the same time*. The challenge is to connect all these many different combinations of data flows. For this we need a public infrastructure – much akin traditional infrastructures like railsways, energy grids etc. *information is an infrastructure as well*. Do not get confused by the immaterial shape of information. It is an infrastructure on which society (government, firms, citizens) can built services. Now just like traditional material infrastructures the problem is that the building and maintenance of the infrastructure is a very costly venture but all the money is being made in the services that run on top of the infrastructure. Yet without the infrastructure these services would not have been possible in the first place. This means that the establishment of such a (public) infrastructure is a typical government task. There is however a clear role for private sector wholesales and retailers who could provide additional services to run the platform/infrastructure (e.g., cleaning up data, making tailor-made subsets of data, combining data, deal-making etc.) The French Data Publica is a nice example here.It should be kept in mind that opening up data requires an active, continuous process – not a one-off act. This is because information has a natural tendency to get closed (a.k.a. encrypted a.k.a. undefined a.k.a. misaligned a.k.a. vague/blurry/confused a.k.a. noisy/polluted a.k.a. messy/disordered. Hey I never said live as a Open Data/PSI platform provider would be easy (but call me if you want one!)From an economic point of view, we finally get what we wanted: marginal cost pricing. This is because a public infrastructure has the characteristics of a natural monopoly (that is, fixed costs are very high compared to variable costs – hence average costs exceed marginal costs for the entire output range). The optimal theoretical (…) solution is to establish a monopoly that sets a price where MC=MR. In this situation at least the deadweight losses are covered but the revenues do not cover normal costs anymore. As a result, some tax money is still needed to subsidize the running of the infrastructure. A public-private partnership is one obvious way out here. If the infrastructure would have been completely in the hands of a private firm, not only is the firm very powerful (remember it is a monopoly – over a *critical* infrastructure …) but the firm would set the prices much higher (for the connoisseurs: it would produce at the monopoly level which would result in a big deadweight loss)
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    • 1. On the marginPricing of Open Dataor the icing on theTaking government data re-use to the next level!Rotterdam, March 16 2012Robbin te version)
    • 2. Marginal-cost pricing
    • 3. Doing businessManufacturer Wholesaler Retailer Consumer
    • 4. Two types (go to war) Type I• Open Data Manufacturer Wholesaler Retailer Consumer• “as is”• Spill-over• Zero price
    • 5. Two types (go to war) Type I• Open Data Manufacturer Wholesaler Retailer Consumer• “as is”• Spill-over• Zero price Type II• PSI• Quality assured Manufacturer Wholesaler Retailer Consumer• Business as usual• Cost plus price
    • 6. Breaking the chain ConsumerWholesaler Retailer Type III• Open data & PSI• Quality depends (SLA)• Economics of infrastructures Manufacturer• Marginal cost pricing (for infrastructure)
    • 7. ordreaming of Contact me: Robbin te Velde or +31(0)30-2150580