The Economics of Open Data – Mini-Case, Transit Data & TransLink

TransLink, the company that runs public transit in the region where I live (Vancouver/Lower Mainland) has launched a real time bus tracking app that uses GPS data to figure out how far away the next the bus you are waiting for really is. This is great news for everyone.

Of course for those interested in government innovation and public policy it also leads to another question. Will this GPS data be open data?

Presently TransLink does make its transit schedule “open” under a non-commercial license (you can download it here). I can imagine a number of senior TransLink officials (and the board) scratching their head asking: “Why, when we are short of money, would we make our data freely available?”

The answer is that TransLink should make its current data, as well as its upcoming GPS data, open and available under a license that allows for both non-commercial and commercial re-use, not just because it is the right thing to do, but because the economics of it make WAY MORE SENSE FOR TRANSLINK.

Let me explain.

First, there are not a lot of obvious ways TransLink could generate wealth directly from its data. But let’s take two possible opportunities: the first involves selling a transit app to the public (or advertising in such an app), the second is through selling a “next bus” service to companies (say coffee shops or organizations) that believe showing this information might be a convenience to their employees or customers.

TransLink has already abandoned doing paid apps – instead it maintains a mobile website at m.translink.ca – but even if it created an app and charged $1 per download, the revenue would be pitiful. Assuming a very generous customer base of 100,000 users, TransLink would generate maybe $85,000 dollars (once Apple takes its cut from the iPhone downloads, assuming zero cut for Androids). But remember, this is not a yearly revenue stream, it is one time. Maybe, 10-20,000 people upgrade their phone, arrive in Vancouver and decide to download every year. So your year on year revenue is maybe $15K? So over a 5 year period, TransLink ends up with an extra, say $145,000 dollars. Nothing to sneeze at, but not notable.

In contrast a free application encourages use. So there is also a cost to not giving it away. It could be that, having transit data more readily available might cause some people to choose taking transit over say, walking, or taking a taxi or driving. Last year TransLink handled 211.3 million trips. Let’s assume that more accessible data from wider access to the data meant there was a .1% increase in the number of trips. An infinitesimally small increase – but it means 211,300 more trips. Assuming each rider pays a one zone $2.50 fare that would still translate in an additional revenue of $528,250. Over the same five year period cited above… that’s revenue of $2.641M, much better than $145,000. And this is just calculating money. Let’s say nothing of less congested roads, less smog and a lower carbon footprint for the region…

When the this analysis is applied to licensing data it produces the same result. Will UBC pay to have TransLink’s real time data on terminals in the Student Union building? I doubt it. Would some strategically placed coffee shops… possibly. Obviously organizations would have to pay for the signs, but adding on annual “data license fee” to display’s cost would cause some to opt out. And once you take into account managing the signs, legal fees, dealing with the contract and going through the sales process, it is almost inconceivable that TransLink would make more money from these agreements than it would from simply having more signs everywhere created by other people that generated more customers for its actual core business: moving people from A to B for a fee. Just to show you the numbers, if shops that weren’t willing to pay for the data put up “next bus” screens that generated a mere 1000 new regular bus users who did only 40 one way trips a year (or 40,000 new trips), this would equal revenue of $100,000 every year at no cost to translink. Someone else could install and maintain the signs, no contracts or licenses would need to be managed.

From a cost recovery perspective it is almost impossible to imagine a scenario where TransLink is better off not allowing commercial re-use of its data.

My point is that TransLink should not be focused on creating a few bucks from licensing its data (which it doesn’t do right now anyway). It should be focused on shifting the competitive value in the marketplace from access to accessibility.

Being the monopoly holder of transit data does not benefit TransLink. All it means is that fewer people see and engage with its data. When it makes the data open and available “access” no longer becomes the defining advantage. When anybody (e.g. TransLink, Google, independent developers) can access the data, the market place shifts to competing on access to competing on accessibility. Consumers don’t turn to who has the data, they turn to who makes the data easiest to use.

For example, Translink has noted that in 2011 it will have a record number of trips. Part of me wonders to what degree the increase in trips over the past few years is a result of making transit data accessible in Google Maps. (Has anyone done a study on this in any jurisdiction?) The simple fact is that Google maps is radically easier to use for planning transit journeys than Translink’s own website AND THAT IS A GOOD THING FOR TRANSLINK. Now imagine if lots of companies were sharing translink’s data? The local Starbucks and Blenz Coffee, to colleges and universities and busy buildings downtown. Indeed, the real crime right now is that Translink has handed Google a defacto monopoly. It is allowed to use the data for commercial re-use. Local tax-paying developers…? Not so according to the license they have to click through.

Translink, you want a world where everyone is competing (including against you) on accessibility. In the end… you win with greater use and revenue.

But let me go further. There are other benefits to having Translink share its data for commercial re-use.

Procurement

Some riders will note that there are already bus stops in Vancouver which display “next bus” data (e.g. how many minutes away the next bus is). If TransLink made its next bus data freely available via an API it could conceivably alter the procurement process for buying and maintaining these signs. Any vendor could see how the data is structured and so take over the management of the signs, and/or experiment with creating more innovative or cheaper ways of manufacturing them.

The same is true of creating the RFP for TransLink’s website. With the data publicly available, TransLink could simple ask developers to mock up what they think is the most effective way of displaying the data. More development houses might be enticed to respond to the RFP increasing the likelihood of innovations and putting downward pressure of fees.

Analysis

Of course, making GPS data free could have an additional benefit. Local news companies might be able to use the bus’s GPS data to calculate traffic flow rates and so predict traffic jams. Might they be willing to pay TransLink for the data? Maybe, but again probably not enough to justify the legal and sales overhead. Moreover, TransLink would benefit from this analysis – as it could use the reports to adjust its schedule and notify its drivers of problems beforehand. Of course everyone would benefit as well as better informed commuters might change their behaviour (including taking transit!) reducing congestion, smog, carbon footprint, etc…

Indeed, the analysis opportunities using GPS data are potentially endless – much of which might be done by bloggers and university students. One could imagine correlating actual bus/subway times with any other number of data sets (crime, commute times, weather) that could yield interesting information that could help TransLink with its planning. There is no world where TransLink has the resources to do all this analysis, so enabling others to do it, can only benefit it.

Conclusion

So if you are at TransLink/Coast Mountain Bus Company (or any transit authority in the world), this post is for you. Here’s what I suggest as next steps:

1) Add GPS bus tracking API to your open data portal.

2) Change your license. Drop the non-commercial part. It hurts your business more than you realize and is anti competitive (why does can Google use the data for a commercial application while residents of the lower mainland cannot?). My suggestion, adopt the BC Government Open Government License or the PDDL.

3) Add an RSS feed to your GTFS data. Like Google, we’d all like to know when you update your data. Given we live here and are users, it be nice to extend the same service to us as you do them.

4) Maybe hold a Transit Data Camp where you could invite local developers and entrepreneurs to meet your staff and encourage people to find ways to get transit data into the hands of more Lower Mainlanders and drive up ridership!

 

 

17 thoughts on “The Economics of Open Data – Mini-Case, Transit Data & TransLink

  1. Bill Lee

    “Of course, making GPS data free could have an additional benefit. Local
    news companies might be able to use the bus’s GPS data to calculate
    traffic flow rates and so predict traffic jams.”
       Which is what I was thinking.
       Translink could help everyone.  Feedback to GPS displays might update traffic conditions as we don’t have a lot of sensors in the road.

    Reply
  2. Gerry A.

    Great post David.   We are working hard towards providing more information to our customers.   You will find that many of these ideas are also shared among many here at TransLink.    We are currently just beginning with Real Time.   Much of the effort is focused on business processes and the Real Time Transit Information architecture.  
    I’ll connect with you to provide an agency side vantage point as I think you will find interest in this.   Thanks for taking the time to write your blog.   Technology in Transit is both very exciting and very active!

    Reply
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  7. Al Kags

    This is a valuable thought. In Kenya as we begin to consider the value (still a tad behind the economics thought process and where people like myself and Jay Bhalla are spending time with Government officials showing the value to the economy of a continued release of data freely, I realise that a study on the effects of open data on an economy in measurable SMART terms could be useful for the world – or is anyone aware of one anywhere in the world?

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