IPR 4 Data Sales & Licences? Concepts & Consequences

IPR 4  Data Sales & Licences? Concepts & Consequences

Bluntly put, too many people labour under the misconception that when they buy information and data it automatically becomes ‘theirs’, or alternatively, because it is publicly accessible the data is somehow ‘free’.

Case Study. One Asset Manager at an event disputed why he should pay for data when he could get it free from ‘Google Finance’ and use that. This Asset Manager had patently not read the Google Disclaimer.

What are you paying for?

At its most simplistic level electronic information and market data needs to be treated more like a software licence than say a car.

If only it were that simple in the information and market data world. In the example above the only real restrictions are that you do not illegally re-sell and/or copy the product/service, and use more licences than one has paid for.

The key difference is the software is a tool, data creates the additional value to the user.

Information and data are inherently flexible, and so each new way of distributing and utilising data comes with a potential usage cost, along with a set of legally binding rules which govern rights to use that data.

Knowing the difference between sales and licensing now becomes vital.

What is a Sale? What is a Licence?

The root cause of mutual ownership misunderstandings lies in differentiating between the sales of licences to use market data and an actual sale of market data. It soon becomes obvious which is the preferred model of the ‘seller’.

Confusingly, vendors and exchanges call their frontline representatives ‘market data sales’ rather than ‘market data licence sales’. While not intended to be intentionally misleading, it removes an element of clarity when discussing ‘sales’.

What we see are 5 basic differences between a sale and a licence, and while these are clear to data managers, they rarely figure in the thoughts of the end users, until they become part of the internal payment process.

The table below provides a summary overview.

To an extent the 5 components of a sale, or sale of a licences are a re-hash of the differences between what is a sale and what is a licence, but offers a more real world view of the process.

To Serve and Protect.

Once the licensing concept has been understood, the thorny question of ensuring compliance with the permitted usage policies.

Firstly, the licence owners want to make certain they get their money, and this requires users to disclose, accurately usage.

Our next section, IPR 5 The Question of Reporting and Licences, will discuss in more detail.