IPR 1 Market Data: The Intangible Asset with Big Dollar Value
It seems hard for many people to understand that information and market data can have an owner, and those owners have rights which are exercised through charging third parties for distributing and using their market data and information. Sometimes it is not even clear who the beneficial owner is.
This lack of understanding can be cultural, there is an innate inability or willingness to see how one can deprive another someone else the use of something that is intangible or can be replicated at ease.
For instance, if someone steals a car, they are taking an object that is physical, it can be seen in the real world and touched. It deprives the owner of the future usage of the vehicle, the denial of use through theft is clear and obvious.
Unfortunately, that level of transparency does not always seem to work for electronic data. This data is something that appears to be somewhat ephemeral, somehow it is alive through the updates, but not truly real. While the prices can be seen on screens, or in the background silently powering applications, they cannot be touched, they are not quite tangible.
Also, illegal usage does not usually deprive legitimate users nor the owner of access to using the pirated data because of its very ephemeral nature and its elastic ability to be used in infinite ways, in infinite places, at exactly the same time.
What illegal usage does do is deprive the rightful owners the revenue they ought to be paid for the usage of their market data.
It is that ephemeral nature, its ubiquity, the elasticity of infinite usage that defines how the market data industry charges for information.
The ability to charge for different types of market data through licensing enables the source owners to create a high margin business generating significant revenue flows. The users of the market data are legally inhibited from doing with the data what they will. They must comply with the contracts, licences, and policy agreements they have entered into with suppliers.
If it were all that simple then the issues relating to Intellectual Property Rights (IPRs) of market data and information would not be so complex nor so contentious.
There are multiple questions that must be addressed, and we review and analyse the key ones in the other sections of this report.
- Where does ownership really lie, and what are the grey areas?
- What issues relate to contracts?
- How to have effective data governance and market data management?
- Reporting of usage and licensing of usage are different, why?