More than 2.5 quintillion bytes of data are generated every day, of which 90% was generated in the last two years. With this explosive amount of data generation, data marketplaces have immense potential to create new revenue streams by productizing data assets.

Data marketplaces are displacing old data sharing models and significantly altering the way consumers transact with data. They unify governance, Big Data, and security tools into a common, seamless data supply chain. Three different types of data marketplaces monetize data assets: personal data marketplaces, business data marketplaces, and internet of things (IoT) sensor data marketplaces. Enterprises need to develop a clear understanding of the diverse processes and dataset requirements for each type of data asset. Further, data providers need to adopt a strong strategy around their target customers and the types of value-added data and services they want.

Data marketplaces enable the creation of new digital services and business models. They also address data valuation by taking a free-market approach, allowing data owners to set their prices and buyers to choose from whom to purchase data among the various multichannels and platforms. With data marketplace adoption continuing to grow, multiple revenue models will evolve in the short and midterm. Marketplaces usually take a commission for each data transaction and charge fees for data marketplace membership, data products listing, storage space, or use of data services. Freemium revenue models also exist, and shifts in data marketplace utilization have already commenced. For example, Snowflake Data Marketplace has users accessing more than 350 datasets from 120-plus data providers, including Heap Analytics, Knoema, FactSet, and Weather Source, across 16 key categories.

Data marketplaces require a dynamic data sharing platform that offers trust, security, transparency, quality, and integration. A fully fledged data marketplace enables data buyers and providers to interact seamlessly. Ultimately, the best data marketplaces will replicate the features and value propositions of product marketplaces such as Amazon and eBay, offering users comprehensive service and a simple interface while expanding the user community.

The impact of disruptive technologies on data marketplaces will rise rapidly in the short term, following the growing adoption of technologies, such as blockchain, and exploration of newer technology architecture in data marketplaces. Globally, governments will move toward regulating data marketplaces to protect consumer data from proliferation and misuse. Data marketplaces will be required to implement strict access controls and police the use and distribution of personally identifiable information.

Despite privacy and data security challenges, the current trajectory shows a clear trend toward the development of new trading platforms specializing in the commercial exchange of data, denoting the significance of anonymization and encryption in emerging data marketplaces. Data marketplaces will have far-reaching impact on businesses and societies as they become a vital cog in the data economy. By enabling monetary transactions, they will create a new chapter in sharing data and building insights on a multitude of variables, including consumers and businesses.

Author: Murali Krishnan