More about Licensing Commercial Data

By Jim Reid

A recent ADCi sponsored podcast in Directions Magazine titled, "ADCi Helps Make Commercial Street Data Manageable for Your Application," raised additional questions about quality, cost and complexity of data licensing. In addition, with the emergence of OpenStreetMap and other local free data sources, the primary question is, "Why should I license commercial data when free data is available?" ADCi's president, Jim Reid, takes this opportunity to answer the questions and provide some perspective.

Free vs. Commercial Data

With the emergence of OpenStreetMap and other local free data sources, American Digital Cartography, Inc. (ADCi) has received many questions about licensing commercial map data. The primary question is, "Why should I license commercial data when free data is available?" That's a great question and like so many things in life the answer is, "It depends." If you simply need a background map for a small geographic area, then the free data is a great option. On the other hand, if your application requires current addresses for geocoding or speed limits and other key attributes for routing, then a commercial data set is often your best option.

The challenge for the user of free data is the inconsistency from area to area. Some cities/counties/states/countries have different attributes and/or standards for collecting and maintaining the data. For example, county "A" may have a one-foot accuracy standard and collect 200 attributes for every street segment. However speed limit or driving restrictions (e.g. one-way designation) may not be among those attributes. County "B" next door may have a six-inch accuracy standard and collect 250 attributes, however 60 of those are unique to county "B" and don't match up with county "A." The problem manifests itself when county "A" has an emergency evacuation and cannot route citizens beyond the county border because the map from the neighboring county "B" doesn't match up with "A's" maps (its not a seamless transition from county to county). In addition, there is no guarantee that the free map data will be maintained. Map data maintenance is a huge expense that is often underestimated.

On the flip side, the commercial data folks (the big two - NAVTEQ and Tele Atlas) are committed to continuous updates to their databases. Commercial data sets are also seamless and contain consistent attributes, as they have a worldwide data model. Worldwide consistency is a huge advantage to users and developers alike.

When licensing commercial data sets, the licensee is entering into a contract that limits what he can do with the data. Major limitations include the inability to give the data away, make a derivative product or share the data with unlicensed parties. The license also specifies a defined use period. Your application may make money using the commercial data, but your licensing terms require that you share a piece of the revenue with the commercial map company. In return, the licensee gets a commitment for up-to-date map data at a fraction of the cost it would take the licensee to update the data himself. In an informal study we conducted with a few customers about five years ago, we determined it was anywhere from 30 to 50 times more expensive to build and maintain map data yourself than it was to license commercial data.

Another question we hear from time to time is, "When will the government provide its data to the commercial data companies?" The answer is they already do. Both NAVTEQ and Tele Atlas have partnerships with hundreds, if not thousands, of local sources for data. Those sources include DOTs, local cities/towns/townships, counties, regional planning commissions and utility companies. Once the commercial data provider obtains data from the local source, it verifies that data to ensure accuracy prior to incorporating it into the master database.

Licensing Commercial Data
"How much does it cost to license commercial data and why is licensing so complicated?" That's another great question and one we hear often. ADCi prides itself on being expert in understanding licensing, and even we find it confusing at times!

An easy way to think of licensing is to compare it to the car industry. All cars provide a means of getting from one place to another. In other words, all cars provide transportation. The same is true for map data. Map data from either of the big two commercial providers will provide the necessary basics for display, geocoding and/or routing. Map data licensing is pretty much based on the value it provides for the application, in much the same way compact cars and luxury cars are priced differently. The more bells and whistles your map application requires, the higher the price you'll pay.

Pricing Models
Pricing models for licensing vary based on the type of application you have. If you are licensing data for a GIS application within your company, the cost is based on the amount of geography you need and the number of internal users. Pricing starts at around $500/year and goes up to about $3,500/year for one to five users of a single county, depending upon how you will be using the data (e.g. display, geocoding, routing). Mobile asset licensing is based on whether you are just tracking or routing (or both) and licensing costs are based on the number of vehicles/assets you have for an internal application. If you are offering an ASP mobile asset management application, licensing is based on the number of subscribers and functionality provided.

Internet based application licensing costs depend on whether the site is free and contains no advertising or subscription costs. Typically these sites are for governments, public supported agencies and nonprofit concerns. If the site is a commercial enterprise then costs are based on a royalty per transaction.

At ADCi we like to simplify this for you as much as possible. Tell us what your application does, who the users are and how much geography you need, and we'll provide you with the best pricing model and appropriate license agreement.

Published Thursday, October 22nd, 2009

Written by Jim Reid

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