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Selling Digital Goods in Data Markets: Part 3, Build Your Own Market

April 11, 2011

This is the third installment in my data markets series. In the first article in the series I introduced the concept of data markets and outlined the types of markets and their main features. I also discussed four of the major data market players: Factual, Freebase, Infochimps, and Windows Azure Marketplace DataMarket.

In the second article I showed you how to use the major features of data markets to select a market to use. I then illustrated locating a pertinent dataset and accessing its data for the specific example of Twitter influence metrics. I did this using Python and YQL via the ‘datamarkets.infochimps.yql.py‘ program available on the series GitHub repository.

In this article, we’re interested in how data markets enable you to access premium (read: not “free as in beer”) datasets, in some cases via a monetary purchase.

I will walk you through examples of how Factual and Infochimps enable premium dataset purchases today. I’ll then show you a simple example data market built using a Python web framework, Google App Engine, and PayPal’s Digital Goods Embedded Payments for pay-per-dataset. This should give you an idea of how a data market would integrate PayPal-based payments for premium data. I’ll also briefly discuss the notion of micropayments for discrete data items; this will be plumbed out more completely in the fourth and final article in this series coming soon.

Premium datasets and purchase options in commercial data markets

Let’s stick with the two data markets we explored most deeply last time around, Factual and Infochimps, as we consider premium dataset options.

As I mentioned in the previous article, Factual provides downloadable CSV data dumps. In the case of certain premium datasets, you must first fill out a form to request download access to the data. For example, if you select “Request Download” from Factual’s “US Point of Interest (POI) and Business Listings” dataset:

you will need to fill out this form to proceed:

As you can see from the text instructions at the top of the download form, filling out the form results in an account manager being assigned to you. Presumably you can expect some discussion with this person before receiving access to the data, at least for certain of the premium datasets.

Rather than implementing premium dataset gatekeeping via an account manager contact process, Infochimps has provided purchase links. For instance, selecting their “Twitter Census – Conversation Metrics: One year of URLs, Hashtags, Smileys usage (monthly)” dataset returns a “Purchase a data set” page:

As you can see, Infochimps enables you to purchase premium datasets using a credit card, falling back to a phone call if the default option doesn’t work. This is ok for large scale purchases such as multi-hundred dollar datasets in their entirety, though the credit card processing fees can be a bit steep for the seller and data market provider. But this breaks down when one wants to offer smaller datasets, or even per-use slices of data from a dataset, for sale. Credit card processing fees are simply not cost effective for small payments, aka micropayments.

Enter PayPal’s Embedded Payments for Digital Goods purchases.

Advantages of using Embedded Payments for Digital Goods

As PayPal describes in “Embedded Payments and Payments for Digital Goods” (click here to access the PDF):

An embedded payment is a payment that initiates a visual presentation of the Adaptive
Payments payment flow in which the sender appears to never leave your checkout or payment
page. Embedded payments make it easier for a sender to make a payment because PayPal may
allow the sender to bypass the PayPal login step.

Embedded payments make the purchase process more streamlined for customers, and that has been shown to increase conversion to sales. This is likely true for dataset purchases from markets just as it is for other digital goods.

Beyond that, however, PayPal embedded payments can also allow a data market to lower its transaction costs on smaller purchase sizes. This makes micropayments for small chunks of data financially possible, increasing profit for the market and its data providers. As the PDF above goes on to note:

PayPal provides various means of aggregating payments, which make the purchase of digital goods easier and can reduce fees through the use of micro pricing, which are special rates for lowcost goods.

Watch this embedded video of last fall’s Innovate Digital Goods conference session to see Embedded Payments in action and learn more about the benefits and implementation of them:

Click here to read the complete article on the PayPal X Developer Network including details of a PayPal-powered data market example.

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